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Corresponbcnte Courses 

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MAR 22 1919 



INSTRUCTION SHEET FOR CORRESPONDENCE 
SCHOOL STUDENTS 

The students are urged to follow these instructions care- 
fully, since only in that way will they be able to get the most 
out of this course. 

1. Read the lesson through first as if you were reading 
a newspaper or a book to get the general impression. 

2. Turn back to the beginning of the lesson and read a 
second time, more carefully. 

3. Stop at the end of each sub-division and without the 
aid of the paper, try to summarize what you have read. 

4. Turn to the questions and see how many you can 
answer without the aid of the lesson. 

5. Turn to the paper to help you in answering those 
questions which you are unable to answer otherwise. 

6. Read as many of the advised readings as you can. 

7 . Write in to the school whenever there is a point that 
is not explained either in the lesson itself or in the advised 
readings, or whenever your class leader — if there is one — is 
unable to supply the information. 

8. Do not be afraid to use the dictionary and the ency- 
clopedia. 

9. Examinations. All students are urged to observe the 
following rules : 

1. Questions are to be answered in ink. 

2. Students are urged to write on one side of the 
paper, leaving a margin of at least one inch on 
the left-hand side. Skip one line between any 
two questions. 

3. Answer the questions fully, but as briefly as 
possible. 

10. The best dictionary for home use is Webster's 
Abridged School Dictionary. 

11. How to use reference books. Look up the point in the 
table of contents. In most books, you will find an index at 
the back. In this index, the points covered in the book are 
alphabetically arranged. Look up the points, and then turn 
to the page indicated in the index. 



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Rand School of Social Science Correspondence Department 

^ 7 East 15th St., New York 

*@e Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARINQ 
LESSON I 

INDUSTRIALISM 
1. Laissez-Faire 

Industrialism or Capitalism rose upon the ruins of Feu- 
dalism. Men had been oppressed. They desired freedom — 
liberty — opportunity for self-expression. This opportunity 
seemed to lie in the direction of greater and greater in- 
dividualism. 

The idea of individualism, applied to industry, took the 
form of the "laissez-faire" doctrine. Industry will neces- 
sarily develop most advantageously if it is unrestricted. 
Therefore it must be ''let alone." 

This doctrine of the French School of Physiocrats was 
forced upon the attention of England by the economist, Adam 
Smith, at the time (1776) when the modern method of factory 
production was getting its start in the British Isles. The 
doctrine offered marked advantages to the manufacturer, be- 
cause it left him free to follow his own devices. The scheme 
therefore won the cordial support of the industrial class at 
the time that it was ascending to a position of dominating 
importance. 

The laissez-faire idea gave the manufacturers exactly 
what they most desired — opportunity to develop their new 
projects, free from hampering influences. They seized the 
idea eagerly. They taught it, preached it, defended it. In- 
dustry must be free to grow ; only as it was let alone, could 
it demonstrate its full possibilities. 

2. Labor Conditions 

So plausible was the doctrine ; so able and powerful were 
the advocates ; so completely had men reacted against tyranny 
and oppression ; so eager were they for liberty in whatever 
form it might appear, that for half a century the laissez-faire 
idea held complete sway over the policies of England. The Eng- 
lish manufacturers had a splendid chance to show what the real 
merits of the laissez-faire idea were. Factory industry grew 
up in England unhampered by legislative restrictions. There 
was none of the governmental interference that in these days 
arouses such bitter opposition in many industrial circles. 
No social idea ever had a better tryout than this of laissez- 
faire. And the results? Words almost fail. The more re- 
volting details do not bear printing outside the realm of 
technical literature. At the beginning of the nineteenth cen- 
tury with the English manufacturers in full control of the 
world markets, and wholly free from any government re- 
strictions, the conditions in the factory districts are thus 
described by a careful student of the problem who is writing 
of the manner in which the workhouse children were sold to 
the mill owners : "Sometimes regular traffickers would take 
the place of the manufacturer, and transfer a number of child- 



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ren to a factory district, and there keep them, generally in 
some dark cellar, till they could hand them over to a mill- 
owner in want of hands, who could come and examine their 
height, strength and bodily capacities, exactly as did the 
slave dealers in the American markets. After that the child- 
ren were simply at the mercy of their owners, nominally as 
apprentices, but in reality as mere slaves, who got no wages, 
and whom it was not worth while even to feed and clothe 
properly, because they were so cheap, and their places could 
be so easily filled. . . . The hours of their labor were limited 
only by exhaustion, after many modes of torture had been 
unavailingly applied to force continued work. Illness was 
no excuse ; no child was accounted ill till it was positively im- 
possible to force him or her to continue to labor, in spite of 
all the cruelty which the ingenuity of the tormentor could sug- 
gest. Children were often worked sixteen hours a day, by 
day and by night. Even Sunday was used as a convenient 
time to clean the machinery. The author of 'The History 
of the Factory Movement' writes: 'In stench, in heated 
rooms, amid the constant whirring of a thousand wheels, 
little fingers and little feet were kept in ceaseless action, forced 
into unnatural activity by blows from the heavy hands and 
feet of the merciless overlooker, and the infliction of bodily 
pain by the instruments of punishment, invented by the sharp- 
ened ingenuity of insatiable selfishness.' They were fed upon 
the coarsest and cheapest food. . . . They slept by turns, and 
in relays, in filthy beds which were never cool, for one set 
of children were sent to sleep in them as soon as the others 
had gone off to their daily or nightly toil. There was often 
no discrimination of sexes; and disease, misery and vice grew 
as in a hot-bed of contagion. Some of these miserable beings 
tried to run away. To prevent them from doing so, those 
suspected of this tendency had irons riveted on their ankles, 
with long links reaching up to the hips, and were compelled 
to work and sleep in these chains. . . . Many died, and were 
buried secretly at night in some desolate spot, lest people 
should notice the number of the graves ; and many committed 
suicide." There Gibbins stops with the remark, — "'One dares 
not trust oneself to try and set down calmly all that might be 
told about this awful page in the history of industrial Eng- 
land." 

The instances adduced in the course of Parliamentary 
inquiries, and cited by Gibbins on subsequent pages, burn hot 
into the imagination of one schooled to the elements of hu- 
manitarian feeling. In one section (230) on "English Slavery" 
are set down the records of case after case of little children 
who were never employed "under five," chained, beaten and in 
some cases dying of exhaustion brought on by excessive toil. 

These statements are corroborated and amplified by the 
historians of the early factory system. Thus Lecky, in his 
"England in the Eighteenth Century," writes: "In the very 
infancy of the system, it became the custom of the master 
manufacturer to contract with the managers of workhouses 
throughout England, and of the charities of Scotland, to send 
their young children to the factories of the great towns. Many 



thousands of children between the ages of six and ten were 
thus sent, absolutely uncared for and unprotected ; and left to 
the complete disposal of masters who often had not a single 
thought except speedily to amass fortunes, and who knew 
that if the first supply of infant labor was used, there was still 
much more to be obtained. Thousands of children at this early 
age might be found working in the factories of England and 
Scotland, usually from twelve to fourteen, sometimes even 
fifteen or sixteen, hours a day. Not infrequently during the 
greater part of the night .... In one case brought before 
Parliament, a gang of these children was put up for sale among 
a bankrupt's effects, and publicly advertised as part of the 
property. In another, an agreement was disclosed between a 
London parish and a Lancashire manufacturer, in which it 
was stipulated that with every twenty sound children one idiot 
should be taken. Instances of direct and aggravated cruelty 
to particular children were probably rare, and there appears a 
general agreement of evidence that they were confined to the 
small factories. But labor prolonged for periods that were 
utterly inconsistent with the health of children was general. 
In forty-two out of the forty-three factories at Manchester, it 
was stated before the Parliamentary Committee in 1816, that 
the actual hours of daily labor ranged from twelve to fourteen, 
and in one case they were fourteen and one-half. Even as late 
as 1840, when the most important manufacturers had been reg- 
ulated by law, Lord Ashley was able to show that boys em- 
ployed in carpet manufactories at Kidderminister were called 
up at three and four in the morning, and kept working sixteen 
or eighteen hours ; children five years old were engaged in the 
unhealthy trade of pin making, and were kept at work from 
six in the morning to eight at night." 

The desperate straits to which a part of the working popu- 
lation of England was subjected as a result of developing the 
factory system, are described by Lecky in these terms : 

"The woolen manufacturing in the eighteenth century was 
carried on by numbers of small masters in their, own homes. 
They usually employed about ten journeymen and apprentices, 
who were bound to them by long contracts, who boarded in 
master's house, and who worked together with him, under his 
immediate superintendence. In Leeds and its neighborhood, 
in 1806, there were no less than 3,500 of these establishments. 
But the gigantic factory with its vast capital, its costly ma- 
chinery, and its extreme subdivision of labor, soon swept them 
away. Hand-loom weaving, once a flourishing trade — long 
maintained a desperate competition against the factories, and 
as late as 1830 a very competent observer described the multi- 
tude of weavers, who were living in the great cities, in houses 
utterly unlit for human habitation, working fourteen hours a 
day and upwards, and earning only five to eight shillings a 
week." 

Even more revolting are the descriptions written of the 
conditions that surrounded the lives of the mine workers in 
the early part of the nineteenth century. Women as well as 
men were taken into the mines, and there subjected to the 
most fearful hardships. In some cases, as the reports of the 
Parliamentary investigation showed, the women dragged the 



cars through passageways that were too low to admit of the 
use of ponies or mules. 

3. The First Factory Laws 

Faced by such conditions at the beginning of the nine- 
teenth century, the more far-seeing of English statesmen 
realized the danger to British national supremacy in a system 
of such fearful exploitation. Beginning in 1802, with the first 
factory act, law after law was passed safeguarding the health, 
first of the children, and later of women and men. Even the 
earliest of these laws, which contained little more than a 
theoretical departure from the policy of laissez-faire was car- 
ried, to use Lecky's phrase, "in the teeth of a fierce class 
opposition." The manufacturers banded themselves together 
and fought the acts one by one. They alleged foreign compe- 
tition, the danger to the existence of British industry, dwin- 
dling profits, and finally, the right of Britons to full individual 
liberty. 

The Act of 1831 forbade night work for persons between 
nine and twenty-one years of age, and limited the working 
day of persons under eighteen years to twelve hours a day and 
nine hours on Saturday. This law, applying to cotton factories 
only, was passed after a third of a century of ceaseless agita- 
tion. Under it, children of nine could be called upon to work 
sixty-nine hours a week. "The hours of black slaves' labor in 
our colonies were at that very time carefully limited by law 
(orders in Council, November 2, 1831) to nine per day for 
adults, and six for young persons and children, while night 
work was simply prohibited." Not until 1847 was a ten-hour 
day for women and children secured. 

These are some of the early phases of industrialism or 
capitalism. The system promised well from the standpoint of 
profits ; but it likewise promised that these profits would be 
wet with tears and reeking with human misery. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for the correction. 
Questions :— 

1. How did the "laissez-faire" doctrine effect labor? 

Capital ? 

2. Can you trace any results of this doctrine in the 

American form of government? 

3. In the American Labor Movement? 

4. Why did the English manufacturers treat the child 

workers with such indifference? 

5. Why do you suppose there was a "fierce class opposi- 

tion" to the passage of the factory acts? 

6. Do you know of any similar situations in the United 

States? 
References : — 

Industry in England — H. D. Gibbins. 
The Modern Factory — Geo. M. Price. 
Merrie England — Robert Blatchford. 
Efficiency and Empire — Arnold White. 
The Factory System — R. W. C. Taylor. 

Copyright, 1919, by The Rand School of Social Science. 



Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

tife Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON II 

WEALTH AND LIFE 
1. Early Criticism 

Reason tells us that we must judge wealth by its effects 
upon human life and human well-being. On that basis alone, 
the present system of industrial society must be justified or 
condemned. 

The prosperity-enthusiasts did not have the field entirely 
to themselves. During the early years of the exploitation of 
English labor by the newly created system of factory industry, 
there were not lacking voices that uttered vehement warnings 
and earnest prophesies concerning the outcome of a system of 
industry that built prosperity upon poverty. Thus, Ruskin in 
one of his analogies, points out the similarity existing between 
a national household and a domestic household. In the one, 
as in the other, the prosperity of the institution must be 
analyzed in terms of the well being of the members. If any 
do not share in the prosperity of home or state, perhaps, after 
all, the prosperity is not real. Applying this proposition to 
England, that was called prosperous by the classical econo- 
mists of his time, he says : "The power of our wealth seems 
limited as respects the comfort of the servants, no less than 
their quietude. The persons in the kitchen appear to be ill- 
dressed, squalid, half-starved. One cannot help imagining 
that the riches of the establishment must be of a very theoret- 
ical and documentary character." Again he notes the "beau- 
tiful arrangement of dwelling-house for man and beast, by 
which we have grouse and blackcock, so many brace to the 
acre, and men and women, so many brace to the garret." 
Throughout his discussion of political economy Ruskin makes 
similar comparisons, and from each one he draws the con- 
clusion that true national prosperity can never be built upon 
poverty and squalor. Where wealth accumulates and men 
decay, there can be but one final result. 

2. Carlyle, Ruskin, Dickens 

Carlyle, too, had nothing but contempt for the widening 
abyss between poverty and riches. It was in 1831 that he 
wrote : "Does not the observant eye discern everywhere that 
saddest spectacle ;The Poor perishing, like neglected, foundered, 
Draught-Cattle, of Hunger and Over-work ; the Rich, still more 
wretchedly, of Idleness. Satiety, and Over-Growth." No one 
was more scornful of the new regime than was Carlyle, who 
found in it the negation of many of the social principles that 
were to him most dear. At a time when they "on all hands 
hear it passionately proclaimed : Laissez-Faire," Carlyle found 
nothing but condemnation of the doctrine in the events that 



were transpiring about him. It is because of this that he ex- 
claims : "Call ye that a Society where there is no longer any 
Social Idea extant; not so much as the Idea of a common 
Home, but of a common over-crowded Lodging House? 
Where each, isolated, regardless of his neighbor, turns against 
his neighbor, clutches what he can get, and cries 'Mine!' and 
calls it peace because, in the cut-purse and cut-throat Scramble, 
no steel knives, but only a far cunninger sort can be em- 
ployed?" Again and again he records his vigorous protests 
against the abuses of the new industry that was preaching 
natural law while it multiplied profits. 

There were splendid true things said by Ruskin ; Carlyle 

scattered his invective over the fields of social wrong that he 

saw about him ; but perhaps the fiercest attacks against the 

abuses of the profit system were made by Charles Dickens. 

"Hard Times" reveals him at his best in his analysis of 

"Prosperity." He holds the thing up, looks at it, laughs at 

it, and then throws it from him, shuddering at its noisome- 

ness and dirt. , . _. 

(a) Prosperity 

When Mr. McChoakumchild, the schoolmaster, assays to 
teach about "National Prosperity," little Sissy Jupe, who has 
been raised in poverty, fails completely to understand his 
point of view. "Girl number twenty," he says, "Now this 
schoolroom is a nation. And in this nation there are fifty 
millions of money. Isn't this a prosperous nation, and ain't 
you in a thriving state?" Poor Sissy was sadly puzzled, but 
she gave the wrong answer, for she said, "I couldn't know 
whether it was a prosperous nation, or not, and whether I 
was in a thriving state or not, unless I know who had got 
the money, and whether any of it was mine." So the teacher 
stated the question differently. Said he : "This schoolroom 
is an immense town, and in it there are a million of in- 
habitants, and only five-and-twenty are starved to death in 
the streets in the course of a year. What is your remark on 
that proportion?" Again, Sissy was wrong, for she said she 
"thought it must be just as hard on those that were starved, 
whether the others be a million million." So the teacher tried 
once more to give his point of view. "I find," he explained, 
"that in a given time a hundred thousand persons went to 
sea on long voyages, and only five hundred of them were 
drowned or burnt to death. What is the percentage?" "Noth- 
ing," Sissy replied, "to the relations and friends of the people 
who were killed." And she was wrong again ! 

Thus does Dickens ridicule the proposition that the chief 
aim of statesmanship is to build a prosperity based upon 
profits and trade-balances. Living in an age Avhen prosperity 
was measured in terms of the well-being of manufacturers 
and traders, he recorded his contempt of the reverence with 
which the British nation regarded this kind of prosperity. 
(b) The Workers 

A very different note enters his language when he turns 



from the lives of the owners and the exploiters to the lives 
of the workers. He enters the subject abruptly. 

"In the hardest-working part of Coketown ; in the inner- 
most fortifications of that ugly citadel, where Nature was as 
strongly bricked out as killing airs and gases were bricked 
in ; at the heart of the labyrinth of narrow courts upon courts, 
and close streets upon streets ... in the last close nook of 
this great exhausted receiver, where the chimneys for want 
of air to make a draught were built in an immense variety 
of stunted and crooked shapes ; . . . among the multitude of 
Coketown, generically called 'The Hands' — a race who would 
have found more favor with some people if Providence had 
seen fit to make them only hands, or, like the lower creatures 
of the seashore, only hands and stomachs — lived a certain 
Stephen Blackpool, forty years of age. 

"Stephen looked older, but he had had a hard life. It is 
said that every life has its roses and thorns. There seemed, 
however, to have been a mistake of misadventure in Stephen's 
case, whereby somebody else had become possessed of his 
roses, and he had become possessed of the same somebody's 
thorns in addition to his own." 

Here Dickens is holding up to ridicule some of the favor- 
ite arguments of the political economists of his day. But in 
many a characterization throughout his novels he describes 
poverty, privation and hardship, particularly among children, 
with a telling power. As if to summarize his indictment 
against a society that permitted such frightful conditions to 
surround the lives of little children, he writes the conversation 
between Scrooge, symbolizing commercialism, and the Spirit 
of Christmas, symbolizing the generosity of human nature, 
in words of gravest import. 

"From the foldings of its robe it brought two children; 
wretched, abject, frightful, hideous, miserable. . . . 

"Oh, Man ! look here ! Look, look, down here !" exclaimed 
the Ghost. 

"They were a boy and a girl. Yellow, meager, ragged, 
scowling, wolfish ; but prostrate, too, in their humility. Where 
graceful youth should have filled their features out and touch- 
ed them with its freshest tints, a stale and shriveled hand, 
like that of age, had pinched and twisted them and pulled 
them into shreds. Where angels might have sat enthroned, 
devils lurked and glared out menacing. . . . 

"Scrooge started back, appalled. Having them shown 
to him in this way, he tried to say they were fine children, 
but the words choked themselves, rather than be parties to 
a lie of such enormous magnitude." Scrooge then asks to 
whom they belonged. 

"They are Man's," said the Spirit, looking down upon 
them. "And they cling to me, appealing from their fathers. 
This boy is Ignorance. This girl is Want. Beware of them 
both, and all of their degree, but most of all beware this boy, 
for on his brow I see that written which is Doom unless the 
writing be erased. Deny it!" cried the Spirit, stretching out 



its hand toward the city. "Slander those who tell it ye ! 
Admit it for your factious purposes, and make it worse ! 
And bide the end !" 

Ruskin turns from such conditions and descriptions with 
his famous statement : "There is no wealth but life." He had 
read the current Political Economy, with its laudation of 
trade-balances, profits and production. Against such patently 
fallacious doctrine he revolted. Bullion would not save a 
country, neither would trade-balances, nor yet profits. Real 
human prosperity was impossible while poverty raised its 
menacing form besides riches. Against such a contradiction, 
he hurled his great affirmation, "There is no wealth but life. 
Life, including all its powers, of love, of joy and of admira- 
tion. That country is the richest which nourishes the great- 
est number of noble and happy human beings ; that man is 
richest who, having perfected the functions of his own life 
to the utmost, has also the widest helpful influence, both per- 
sonal and by means of his possessions, over the lives of 
others." 

These were his standards of economics. His "veins of 
wealth" were not yellow but purple. They were in the flesh, 
not in the rock. He saw life, with all of its abundant pos- 
sibilities, as the goal of national existence. How far had 
the leaders of commercialism fallen from that high standard ! 

The modern industrial system had its rise in England, 
but it is fast developing in the United States. The English 
people have had more time to examine the industrial system 
than we here in America, but the same problems are now 
confronting us that formerly confronted them. 



NOTE. — These questions are intended for the guidance 
of the student and are not to be answered in writing and sent 
in to the school for correction. 

Questions : — 

1. What is your definition of wealth? 

2. What relation should wealth have to life? 

3. How did early British industry serve life? 

4. Does Carlyle's description of the society existing in 

his day fit the facts of modern life? Note the im- 
portant differences. 

5. How would you have answered Mr. McChoakum- 

child's questions? 

6. Do you know any Stephen Blackpools in America? 

Where do they work? Would Dickens' description 
fit their lives? 

7. What is meant by the phrase "There is no wealth 

but life?" Do you agree? 

References : — 

John Ruskin— "Unto This Last" 

Henry George — "Progress and Poverty" (last chapter) 
J. A. Hobson— "The Social Problem" (eh. 1 and 2) 
S. & B. Webb — History of Trade Unionism (ch. 2) 

Copyright, 1919, by The Rand School of Social Science. J^^>S3 



Rand School of Social Science Correspondence Department 

7 East 15th St, New York 

W? Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARINQ 
LESSON III 

THE PROMISE OF THE MACHINE 
1. Man and the Tool 

Man has been called the tool-making and tool-using 
animal. Among living creatures, he alone has supplemented 
his powers by the use of tools. The tool augments man's 
possibilities. 

The tool gives man his power over the universe. He 
fashions the tool; wields it; owns it. 

A sense of possession goes with the fashioning of the 
tool. The savage who hollowed his canoe from the log or 
chipped the flint for his spear-head owned the thing he had 
made. It was his because he fashioned it. Men love the 
work of their hands, because their hands have done the work. 

The man who wields a tool feels the power of his mastery. 
It is his. Backed by the strength of his arm and guided by 
the light of his brain, it pulsates to its task. He pushes, 
swings, pulls, directs. The tool user is master of his tool. 

Ownership carries with it a sense of proprietorship. The 
man has fashioned and wielded the tool. He owns it. It is 
his. The title, the right of possession remains in the man to 
whom the tool belongs. 

The power of the tool, backed by man's master guidance, 
is the title to his kingdom. He has the earth. He has been 
told to master it and possess it. 

The modern tool is the machine. Ever since the first 
rude wooden spear was fashioned, ever since the first fish- 
bone was shaped into a needle, the first clay was molded into 
a bowl, and the flint was chipped and fitted to the arrow; 
from the most primitive beginnings down to the present day, 
man has been perfecting the tool. He has seen in it new 
possibilities and dreamed into it new wonders of invention. 

2. The Machine 

Only yesterday, the man made, wielded and owned the 
tool. Today — what transformation! The tool has left the 
narrow confines of its age-long prison and appeared in its 
true form as a machine. 

Electric cranes, locomotive engines, steam rollers and 
blast furnaces are machines — intricate, huge, costly. They 
are the product of an age-long evolution of the tool — but they 



are more than the tool. The thumb, forefinger and forehead 
have made a being that is alive with a tireless, superhuman 
power. 

The machine is intricate. No man can make all of the 
parts or engage in all of the processes that go to the con- 
struction of any one machine. Men do not fashion the ma- 
chines they use. \ 

The machine is huge. No man can toss it upon his 
shoulder and carry it. No man can wield it. The machine 
is not carried about as was the tool, from place to place. It 
is not raised or swung or wielded. Instead it is fixed in a 
place, to which the man comes to do his work. 

The machine is costly. No man can own the machinery 
with which he works. First, because it is too expensive for 
each man to own, and second, because where many men work 
with one machine, like a locomotive, if one should own it, 
another would necessarily be denied ownership. Aside from 
collective ownership, there is no possibility for the individual 
worker to own the machine with which he works. 

The huge, intricate, costly machine cannot be fashioned, 
wielded and owned by the man who uses it. The rail mill 
and the printing press differ essentially from the smith's ham- 
mer and the pen. The machine is a super-tool — a new entity — 
for behind it, within it, driving it relentlessly, are the eternal 
powers of nature which drive the universe. Jove's lightnings 
play through the dynamos and along the wires. Water, earth 
and air, concentrated in the machine, toil for man. 

During untold ages mankind has struggled against want 
and privation. It was the effort to escape from this struggle 
that called the machine into being. 

3. Man and the Machine 

The life of a man was bitter. In the jungle, on the plain, 
under the mountain-side, dependent on nature, he lived, pre- 
cariously, from hand to mouth, warring continually with the 
forces by which he was surrounded ; or else, a unit in some 
form of social organization, he earned black bread and a pallet 
of straw through unremitting toil. Conquest, tribute, slavery, 
serfdom were means of escape which raised a few above the 
crudities of the world struggle, while they ground the major- 
ity of mankind into dust. 

The machine has vanquished that most ancient enemy of 
mankind — famine. The machine has made want and privation 
eternally unnecessary. The machine, under capitalism, pro- 
duces enough for all. No stomach need be empty, no back 
naked, no head shelterless. The machine has given man a 
hundred hands where before he had only two. Flour, woolen 
yarn, leather, clapboards, may be had in ample abundance. 



If each man will do only a moderate amount of labor, the 
people of every country that employs machinery would be 
provided with all of the necessaries of life. 

The supply of these necessaries can be insured without 
overwork. There is no need for a twelve-hour day. The 
users of machinery may be well supplied with all things need- 
ful to life with a few hours work each day, leaving ample time 
for the unfolding of the human spirit. 

Leisure is as much a product of the machine as are bread 
and shoes. The command, "In the sweat of thy face shalt 
thou earn thy bread," is so mitigated by the powers of the 
machine that men may earn a generous living and have time 
to play and think in the same number of hours that formerly 
produced a bare subsistence. 

The machine augments the possibilities of life. By multi- 
plying human productive power it increases the number of 
things that man may have at the same time that it enlarges 
his possibility of leisure. 

The machine has led, as might readily have been pre- 
dicted, to the piling up of phenomenal masses of wealth. Man's 
productive power has been multiplied by marvelous achieve- 
ments. New resources are utilized. Old ones are employed 
to better purpose. New methods, improved devices, save 
labor, time and energy, while they increase output. 

The United States Bureau of Labor tells the story in 
figures. Twelve-pound packages of pins can be made by a 
man working with a machine in 1 hour 34 minutes. By hand 
the work would take 140 hours 55 minutes. The machine is 
ninety times quicker than the hand. Furthermore, "the ma- 
chine-made pin is a much more desirable article than the hand- 
made." "A hundred pairs of men's medium grade, calf, welt, 
lace shoes, single soles, soft boxtoes, by machine work take 
234 hours 26 minutes; by hand the same shoes take 1,831 
hours 40 minutes. The labor cost on the machine is $69.55, 
by hand, it is $457.92. Five hundred yards of gingham checks 
are made by machine labor in 73 hours ; by hand labor in 
5,844 hours. One hundred pounds of sewing cotton can be 
made by machine labor in 39 hours ; by hand labor in 2,895 
hours. The labor costs are proportionate." The same facts 
hold true, of agriculture. A good man with a scythe can reap 
one acre a day ; a good reaper and binder does the same work 
in 20 minutes; six men with flails can thresh 60 liters of wheat 
in half an hour. One American thresher can do twelve times 
as much (740 liters). Commenting on these and similar fig- 
ures, the government report states : "The increased effective- 
ness of man-labor, aided by the use of machinery . . . varies 
from 150 per cent, in the case of rye, to 2,244 per cent, in the 
case of barley. From this point of view, a machine is not 
a labor-saving but rather a product-making device ..." 



This machine efficiency is reflected in the census figures 
showing the wealth of the United States. During the last 
half century, wealth has increased very much faster than 
population. A glance at the following table will confirm the 
statement. 

Year Population Wealth 

(in millions) (in millions) 

1850 23 7,135 

1860 31 16,160 

1870 39 30,069 

1880 50 43,642 

1890 63 65,037 

1900 76 88,517 

1910 92 107,104 

1917 103 250,000 

This, then, is the machine — a thing conceived by man's 
inventive genius and utilizing nature's power to supply human 
needs. The machine is man's energy and strength, multiplied 
many times. Its products are manifold. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions : — 

1. Can you trace the evolution of the plow? the sewing 

machine? the trip-hammer? 

2. Why do men love the things they make? 

3. In what sense have men the right to the product of 

their own hands? 

4. Explain carefully the differences between the tool and 

the machine. Note the ways in which each has 
served society. 

5. In what sense has the machine vanquished hunger? 

Are any people hungry in the great centres of 
machine production? 

6. May not the increase in the population which machine 

production has made possible, overpopulate the 
world? 

7. Is there any near limit in the possibilities of machine 

production? 

References : — 

The Instinct of Workmanship — Thorstein Veblen 
The Theory of the Leisure Class — Thorstein Veblen 
Economic History of the U. S. — E. L. Bogart 

Copyright, 1919, by The Rand School of Social Science. 



EXAMINATION I 

Note. — These questions are to be answered in writing and 
are to be sent to the school for correction and rating. 



1. Does the Capitalist Class in America still preach and 
teach "laissez-faire"? How? Where? 

2. Would conditions as described in Lessons I, II and 
III be possible in the United States? Explain. 

3. What relation has Capitalism established between 
work and life? 

4. What can we learn from England's experience with 
capitalism? 

5. Are we learning it? Tell where and how? 

6. Why did the machine replace the tool? 

7. Has the machine come to stay? 

8. Should the worker encourage the use of machinery? 



The Rand School of Social Science Correspondence Department 

7 East 15 th St., New York 

"tgHe Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON IV 

WHAT HAS THE MACHINE DONE? 
1. Increased Productivity 

The machine multiplies man's productive power. The 
coordination of industrial units leads to increased efficiency. 
The past half century of machine industry and of industrial 
organization, combination and concentration has witnessed a 
great increase in wealth. 

The wealth of the country in 1850 was a little more than 
seven billions. By 1917 it had risen to two hundred and fifty 
billions. Although the population was only about four times 
as great in 1917 as it was in 1850 the total wealth of the 
country was more than thirty times as great. 

The machine has infinite possibilities. It has fulfilled its 
promise by creating immense masses of wealth. The ma- 
chine has done what it was expected to do. There remains 
man, the creator of the machine, and the relations that have 
sprung up between the creator and the creature of his creative 
power. 

The machine has converted man the tool user into man 
the machine tender. Markham's "Man with the Hoe" was 
master of his tool. "Bowed with the weight of centuries, he 
leans upon his hoe and gazes on the ground." Yet, when his 
contemplation was over, he could shoulder the hoe and take 
it home. He could wield it, repair it, duplicate it. It be- 
longed to him. 

Man, the tool user, could fashion, wield and own his tool. 
Not so, man the machine tender. He is brought face to face 
with giant forces and mighty mechanisms. The tools of in- 
dustry are no longer stored away beside the peasant's cot. 
Instead they are kept in the factories and plants where the 
work of the world is now done. 

The tap-tap of the home workshop has been replaced by 
the roar of the modern workshop — the industrial world. The 
vast mechanical devices, symbols of man's ascending power, 
speak in stentorian tones the watchword of modern industry. 

2. Efficiency 

There is a boy doing piece work. He sits in front of a 
revolving table, putting nuts onto bolts. He picks up a nut, 
places it upside down on the table ; picks up a bolt, presses 
it against the revolving nut, which passes up on the thread of 



the bolt; picks up another nut, places it upside down on the 
revolving table, picks up a bolt and presses it against the nut ; 
picks up another nut, threads it on a bolt, and so on through 
the twelve hours of his "shift". If he is quick, he can finish 
about eight hundred bolts an hour. He receives ten cents 
a thousand for the work. 

This man is fastening the spokes into the iron eyelet that 
forms one side of the hub of a baby coach. He reaches for 
an eyelet, slips it to its place on the die, brings two pieces 
of bent wire that are to be the spokes and drops them into 
place with his right hand, drops a third piece of wire in place 
with his left hand, presses a treadle with his foot ; the machine 
drops a die that fastens the six spokes securely into the eye- 
let; the man throws the completed work on a pile, reaches for 
another eyelet and repeats the process. There are seven hand 
motions and one foot motion required for each operation. The 
experienced operator turns out 20 pieces a minute ; 1,200 pieces 
an hour, 10,000 pieces a day. In a week this machine tender 
repeats his series of eight motions from 50,000 to 60,000 times. 
What a prospect, at one week end, to contemplate for the 
coming week — fifty thousand repetitions of an habitual sec- 
tion ! It is the price this man must pay for his daily bread. 

The soul that should expand through the creative effort 
of craftmanship ; the mind that should be occupied with the 
educative processes of constructive work ; the hand that should 
be trained to follow the behests of the soul and obey the di- 
rections of the mind ; the stream of the man's consciousness — 
his whole being are prostituted to eight motions repeated, re- 
peated, repeated until the imagination grows dizzy, as in the 
contemplation of infinity, with the difference that here it is 
affrighted by an infinity of littlenesses. 

The tool user made his tool, wielded it and owned it. 
The machine tender is using a machine made by other workers 
in highly specialized factories. He no longer wields the tool. 
Instead, leaving his home, he goes to the place where the tool 
is, to work with it there. As an individual, the tool user can- 
not own the machine that he uses. One machine — a blast 
furnace, for example — is used by many men, and is useless 
unless many men use it. The machine is a social tool — de- 
pending for its efficacy upon the co-operation of many people. 

3. Social Production 

The machine is social in nature, as the tool was in- 
dividual. Many men work with the machine. If one man 
be permitted to own it, he has a potent advantage over his 
fellows which may enable him to dictate to them the terms 
under which they shall work, and to compel them to pay him 
a part of the product of their labor because he owns the ma- 
chine. They must make a living. That means, nowadays, 
that they must work with machinery. The machine owner 



has an advantage because he owns the means of another's 
livelihood. His exercise of that advantage is called ex- 
ploitation. 

4. Exploitation of Labor 

The feudal lord exploited his tenants through his owner- 
ship of their means of livelihood — the fertile land. The modern 
world depends for its living upon machinery instead of upon 
agricultural land, and therefore the owner of machinery is in 
a position similar to that of the land owner in feudal Europe. 

The tool user was master of his tool. He could wield it. 
It was his. The machine tender cannot wield his machine. 
Instead, he gears himself to meet the pace which the machine 
sets. 

There is something fundamentally vicious about this pro- 
cess of setting the man to keep the pace of the machine. The 
tool user worked according to his volition. When he struck 
a blow with his hammer, he did so because he wished to strike. 
His emotions and his will were guiding principles. He was 
a free man ! 

The machine tender does his work in time with the ma- 
chine. He must accept its pace and follow its lead if he is 
to keep his job. He is under coercion by the machine. 

Those who insist on liberty and resent despotism may 
see in the machine a means of coercion that surpasses all its 
predecessors in effectiveness and finality. 

The man who takes a place in a modern industry becomes 
a unit in a highly organized system. He is a unit, an un- 
essential unit, because he can be easily replaced. He is work- 
ing under the direction of a great industry. There is little 
contact between the men at the top and the men down below. 

The stops and gears are set. The machine is started. 
To paraphrase Lord Nelson, "Machinery expects every man 
to do his duty." His work is cut out for him. 

The machine is exacting, implacable. Long hours and 
high temperatures are to it a matter of utter indifference. 
The machine works by night and by day under conditions 
that are humanly impossible, yet human beings are asked to 
keep the pace which the machine sets. 

These are but a few of the many discomforts that sur- 
round the work of machine tenders. No mention has been 
made of the more vicious features of machine tending, which 
are an incidental and not an integral element of industrial 
life. The high accident rate and the industrial diseases so 
prevalent in some industries have in many cases been caused 
or intensified by the coming of the machine ; nothing has been 
said of the child labor that the machine has made possible. 
Rather, it has been the aim to show that the machine is a 
pacemaker, shod with seven-league boots; a taskmaster, re- 



lentless and implacable. Monotony, speed, intensity, strain, 
all are incident to work in which the rate is set by the power 
of the machine rather than by the ability of a worker to keep 
the pace. 

The machine is the dominant factor in industry. It is 
expensive; it must be used to its full capcity; it is made to 
turn out product. Take these things together, and the worker 
finds himself serving the machine — caught in the levers and 
cogs. 

Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions : — 

1. Is there a factory near your house? Visit it and watch 

the different "operations" required to turn out a 
product. 

2. How many such operations does one person perform? 

3. What is the relation between the deftness of the 

worker and the fewness of these operations? 

4. Does the worker who makes the intricate machine 

derive more satisfaction from his work than the 
user of the machine? Explain. 

5. "The necessity of keeping pace with the machine, 

even though the pace is a comparatively slow one, 
arouses resentment in the soul of a liberty loving 
human being." Is this true? Explain. 

6. Would it be possible for the machine to inaugurate 

a new slavery? By what process? 
References : — 

Letters from a Chinese Official — G. Lowes Dickinson 
The Instinct of Workmanship — Thorstein Veblen 
Industry in England — H. D. Gibbins 
Economic History of the U. S. — E. L. Bogart 
Merrie England — Robert Blatchford 



Copyright, 1919, by The Rand School of Social Science. °^^»S 



Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

^e Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON V 

WAGES AND SALARIES IN AMERICAN INDUSTRY 
1. Specialization of Labor 

The machine has heaped up huge masses of wealth at the 
same time that it has changed the worker from an artisan 
into a machine tender. What reward has it given the worker? 
What portion of the huge wealth mass goes to him? 
A part of the answer will be found in the wage statistics 
published by various public bureaus and authorities. 

Broadly speaking, there are three kinds of workers in 
modern industry. First, there are managers, superintendents, 
executive and administrative officers, who are entrusted with 
the business of directing industrial operations ; second, there 
are the clerks, bookkeepers and other persons engaged in the 
commercial department of industry; and, third, there are the 
wage earners. 

Very often a distinction is made between salaries and 
wages. Managers, superintendents, foremen and clerks are 
salaried employees. Other persons employed by the day, week 
or piece are classed as wage-earners. It is astonishing to note 
the small proportion of those engaged in modern industry who 
receive salaries. 

The organization of industry has proceeded to a point 
where the managers are few and the wage-earners numerous. 
In all of the manufacturing industries of the United States, 
according to the last census, 7,678,578 persons are gainfully 
employed. Here is a table copied from the census, showing 
the division of these people into classes : 

2. Industrial Classes v 
The Industrial Grouging of Persons Engaged 

in Manufacture, 1909 
Class Total 

All classes 7,678,578 

Proprietors and officials 487,173 

Proprietors and firm members 273,265 

Salaried officers of corporations 80,735 

Superintendents and manap-ers 133,173 

Clerks 576,359 

Wage earners (average no) 6,515,046 

The managers of industry are few, even when the under- 
lings are included. The number of clerks is somewhat larger 



than the number of managers. The wage-earners constitute 
seven-eighths of all of the people engaged in manufacturing. 

These figures relate to all kinds of manufacturing in- 
dustry, including small bake shops, small printing establish- 
ments, small slaughter houses and other small-scale operations. 
In highly organized, large-scale businesses, the proportion 
of wage-earners is far greater than it is in the total for all 
manufacturing industries. 

Take the cotton goods industry as an example. The total 
number of persons employed in the cotton industry at the 
last census was 387,771. Of this total number, 377 were pro- 
prietors and firm members; 1,726 were salaried officials of 
corporations ; 2,358 were superintendents and managers ; 4,430 
were clerks, and 378,880 were wage-earners. For every thou- 
sand people engaged in the cotton industry, 977 were wage- 
earners. 

3. V/ages and Salaries 

It is impossible to secure any reliable figures showing 
the salaries of officials in American Industry. The "General 
Officers" of first class railroads have "average daily earnings" 
of about $20 per day. Such a figure means very little. It is 
a mere generalization. The same thing must be said about 
the figures regarding general managers, managers and other 
similar officials. We have little idea of this rate of pay other 
than that revealed by individual cases. 

There are a number of reports showing the wages of 
"salaries" received by clerks. Such reports usually divide the 
earnings of clerks on the sex line, so that we know the earn- 
ings of the men clerks and the women clerks. On the whole, 
these figures show that the clerks' "salary" is about that of 
the moderately skilled wage-earner. Except for a few of the 
chief clerks, the clerical force is not compensated on the level 
of the better paid wage-earners. 

Therefore, the figures showing the earnings of the wage- 
earners will be fairly representative for the clerical force. 
For the "Men higher up" we have little data covering salaries. 

A number of states publish figures showing the wages of 
wage-earners. The last available report from New Jersey 
(1916) shows that of the 315,055 male wage-earners employed 
in New Jersey industries 67,041 received less than $10 per 
week and 194,051 received less than $15 per week. Among 
this entire group of wage-earners only 48,501 or 16% were 
earning more than $20 per week and 15,286 or 5% were earn- 
ing over $25 per week. In this instance 17/20 of the male 
wage-earners of the great state were being paid less than 
$1000 a year. 



The wage rates of the women workers in New Jersey 
were much lower than those of the men. The total number 
of women employed was 99,799. Of these 23% were paid 
less than $6 per week; 56% less than $8 per week and 79% 
less than $10 per week. Of the total number of women em- 
ployed 10,508 received $12 and over and only 3,269 or 3% 
were paid $15 and over. 

Similar wage rates are reported by Massachussetts, Ohio, 
Kansas, Iowa, Minnesota and Wisconsin. The rates in Cali- 
fornia and Oregon are slightly higher. 

The latest available wage figures are those for the rail- 
road industry. 

About April 30th, 1918, the United States railway ad- 
ministration published a report of railway wage rates that 
were being paid at that time. These figures show that the 
wages in the south are slightly lower than the wages in the 
east while the wages in the west are somewhat higher than 
wages in the east. On the whole, however, they do not vary 
o-reatlv The total number of railway workers employed at 
the time of the investigation was 1,939,399. Of this total 
26% were paid less than $60 per month ($720 per year) ; 42 / 
were paid less than $70 per month ($840 per year) ; 59% were 
paid less than $80 a month ($960 a year) and 70% were paid 
less than $90 a month ($1,080 per year). Between $100 per 
month and $150 per month one-sixth of the railway em- 
ployees are reported. Ninety-seven per cent of all employees 
on the railroads were being paid less than $150 per month at 
the time of the investigation. And 99 per cent were being 
paid less than $180 per month. 

The figures for railroad wages are in a sense representative 
because the railroad is a standard form of business. 

These figures show that, as we already realize, the wages 
paid to the vast majority of workers in American industry are 
extremely small. Even as late as 1918 under the pressure of 
wartime prices and wartime demands the vast majority of war 
workers were getting less than $100 per month and almost 
none of them were receiving more than $1800 per year. 

The men higher up in industry are better paid than the 
wage-earners. A few of them are very well paid. The men 
higher up are few and far beween. They make up only a tiny 
fraction of the total industrial population. The vast majority 
of those who work are wage-earners and clerks. The wages 
of this group are pitifully small. Among railroad workers; 
steel-workers; packing house employees, and those engaged 
in other great industries, the men receive, in most cases, less 
than $1000 per year— full time work. Most of the women 
workers are paid less than $500 per year. 



The well paid wage-earner is the exception. The low- 
paid worker is the rule. Industry today produces vast quan- 
tities of wealth, but those who are actively engaged in pro- 
ducing the wealth receive, in return for their labor, a mere 
pittance. Abundance of economic life has never been and is 
not now the lot of the worker under capitalism. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions : — 

1. If you are connected with a shop or factory, find out 

how many of those who work there are wage-earn- 
ers ; how many are clerks ; how many are managers 
and officials. 

2. How do you account for the large proportion of wage- 

earners and the small proportion of managers in 
modern industry? 

3. What chance has the worker to "rise" in modern in- 

dustry? 

4. Does the elevation of one worker into the ranks of 

the managers change the condition of the other 
workers ? 

References : — 

Wages in the United States — Scott Nearing- 
Write to the Department of Labor, Washington, D. C, 
and to the Department of Labor in your own State 
for the latest wage figures which they publish. 



Copyright, 1919, by The Rand School of Social Science. 



The Rand School Of Social Science Correspondence Department 

7 East 15th St., New York 

t?fe Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON VI 

LIVING WAGES AND DYING WAGES 
1. Standard of Living 

The wage facts raise a very important question : "Are 
American workers paid enough?" 

Enough? Enough for what? 

You can decide, in the case of a particular family, whether 
the wage is sufficient. Can the same decision be reached in 
the case of thousands and millions of workers? Unless such 
a result is possible, the science of economics is a failure. 

The question of the sufficiency of American wages is 
leading everywhere to endless and often to bitter controversy 
between employers and wage-earners, who ordinarily base 
their contention that wages are "too high" or "too low" upon 
tradition or prejudice rather than upon scientific analysis. 
The result is dissension and misunderstanding. The student 
of economics approaches the matter scientifically. First, he 
studies the wage facts ; second, he decides upon some stand- 
ard by which wage adequacy may be measured or judged; 
and third, he compares the prevailing wages with this standard 
in order to determine their adequacy. 

2. The Minimum of Decency 

There are three propositions which are fundamental to 
any consideration of wages : 

1. Industry must pay a wage sufficient to maintain the 

efficiency of its workers. 

2. Society must oppose any wage that leads to poverty, 

hardship or social dependence. 

3. Wages must be sufficient to enable the worker and 

his family to live like self-respecting members of 
the community. 

These three statements are so generally accepted that 
they require little elaboration. It seems evident that unless 
industry pays a wage that will maintain the efficiency of its 
workers, industry must deteriorate. It seems equally evident 
that unless society insists on a wage sufficient to prevent 
dependence, the family, school, and the state must suffer. 
At the same time, if progress is to be made, the wages paid 
must make possible self-respect, while they stimulate men to 
activity. All three propositions are stated in terms of social 



expediency. The social justice of the present wage system 
will not be called into question. 

3. The Family Wage 

Under the present social system, a man's wage must be 
a family wage. The home is looked upon as the basic social 
institution. Each man is expected to make a home, and having 
made it, to earn a living sufficient to allow the wife to devote 
her time and energy to the care of the home and of the chil- 
dren. While the mother presides over the home, the father 
must receive a wage sufficient to keep his family on a basis 
of physical health and social decency. 

The family most frequently used in recent social studies 
consists of a man, wife and three children under 14 years of 
age. Such a family corresponds in size with the average 
American family. The children are too young to work for 
wages, and the mother should be in the home and not at work 
in the factory. This family is sometimes called the "normal" 
or "type" family. 

No single wage will provide health and decency for all 
families. Some women cannot keep on $40 a week a home 
that others can keep on $20. The ability and personality of 
the housekeeper are large factors in making both ends meet. 
However, there is a minimum income below which the average 
woman cannot provide health and decency for those dependent 
upon her housekeeping. 

A number of attempts to ascertain the cost of a decent 
standard of living have been based on the assumption that 
physical health, education up to the age of fourteen, and the 
other minimum requirements of modern American life were 
included in the term "decency." 

There is a certain minimum of food, clothing, shelter and 
the other necessaries of life below which physical health and 
social decency are impossible. That minimum exists in terms 
of bread and butter, shoes, overcoats, medical attendance and 
school books. It is fixed by the demands of nature and by the 
standards of society, wholly independent of cost or price; 
therefore any discussion of the cost of a decent living begins 
with an analysis of the various items which comprise living 
decency. The amount of food required by the man or by his 
family can be fixed with scientific accuracy. The amount of 
clothing is not susceptible of such an accurate statement, but 
it can be designated in terms of a certain number of garments 
per year. Most students of the standard of living have agreed 
that three or four rooms are necessary to house a family of 
five people decently. They have, likewise, made an allowance 
for medical attendance, for saving, for insurance and for re- 
creation. 



After the number of things necessary to maintain a decent 
standard of living has been decided upon, the question of cost 
is raised. A family requires so much flour, so many pairs of 
shoes, and so many rooms. What is the least amount for 
which these things can be obtained? 

The latest figures dealing with the living wage problem 
were compiled by the War Labor Board. A summary of the 
findings of this Board as stated by Frank P. Walsh, joint chair- 
man, is published in the Survey for December 7th, 1918, 
page 302. 

The Board defines a living wage as follows : "The amount 
of wage upon which a worker and his family may be able to 
subsist in health and with reasonable comforts." 

Mr. Walsh related how the Board had hired the best ex- 
perts available and how they had made a far reaching study 
of the statistics : "and after studying the budgets in all wage 
hearings of late years, a decision was made by the staff, and 
not by the board, that the minimum on which a worker with 
a family of three children of school ages could live, was 72 
cents an hour, or $34.80." 

4. Actual Wage Conditions 

When the War Labor Board tried to put this wage into 
effect it found that it was impossible because "the whole 
structure of our industrial life was based upon so low a wage 
level that if this increase had been made it would have prac- 
tically doubled the common labor rate then prevailing. 

In other words, the unskilled workers at the time of the 
War Labor Board investigation were getting about half 
enough to maintain a decent standard of living. As Mr. 
Walsh himself puts it in the same statement, "three-fourths 
of the common laborers of this country had not been getting 
enough to eat, they had seen their children go into industry, 
and a great number of them were compelled to take in board- 
ers to add to the family income." 

Society demands and expects that men shall support 
families. The future of the state hinges upon the fulfillment 
of this presupposition. At the same time, the modern econ- 
omic organization makes no attempt to assist the man who is 
bringing up a family to face the competition of the man who 
has no family dependent upon him. 

There is no relation between the social (family) needs 
of a man and the wage which he receives. Wages are fixed 
wholly independent of social relations. 

The American wage is anti-social. The present system 
of wage payment fails to stimulate workers to industry and 
thrift because it has not given them a reward in proportion 
to their exertions and ability. There is no relation between 



product and wages. Rather wages are fixed by competition 
and monopoly. The present wage scale fails completely to 
provide a return in proportion to social needs. The simplest 
requirements of social progress call for ambition, for justice, 
and for the provision of health necessities. The present Amer- 
ican wage scale offends even these primitive social standards. 
The American wage is grossly inadequate. Examined 
from any point of view, it fails to provide a sufficient return 
to the wage-earner who is carrying the burden of a young 
family. 

Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions :— 

1. What do we mean by a living wage? 

2. What is meant by a "family wage?" 

3. Should a family wage be paid to all workers, whether 

they have or have no families? 

4. Make out a family budget for the workers in your 

city. On one side place the amounts spent by 
workers for rent, food, clothing, etc. On the other 
side place the amounts needed to maintain "de- 
cency." Note the differences. 

5. How did wages in your city compare with the standard 

of decent living which you have established? 

6. Name the various ways in which wages are inade- 

quate. 
References : — 

The Standard of Living — F. H. Streightoff 
Financing the Wage-Earners Family — Scott Nearing. 
Problems of Poverty — John A. Hobson. 



Copyright, 1919, by The Rand School of Social Science. e^^>^Si 



EXAMINATION II 

Note. — These questions are to be answered in writing and 
are to be sent to the school for correction and rating. 



1. If you were a factory would you prefer to turn out a 
complete product? Explain. 

2. Explain how the ownership of the machine gives one 
man a power over another. 

3. What possible effects upon society can you foresee as 
a result of the small number of managers and the large number 
of wage-earners in the industrial world ? 

4. Comment upon the relative wages of men and women. 
What are the causes? The results of this situation? 

5. Is a "living wage" the same thing as "the full product 
of labor"? 

6. Need inadequacies in living conditions exist under the 
wage system? 



Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

^e Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON VII 

POVERTY 
1. Progress and Poverty 

America teems with wealth. Never, in history, has any 
nation been equally rich. Nevertheless, there are millions of 
people in the United States living in poverty. 

The contrast between "progress and poverty" was set 
forth vividly by Henry George. Like many another reformer, 
he felt the problem deeply, but, unlike many another one, he 
was able to describe it in unforgettable terms. He writes, in 
his "Introduction" : "The enormous increase in productive 
power which has marked the present century and is still go- 
ing on with accelerating ratio, has no tendency to extirpate 
poverty or to lighten the burdens of those compelled to toil. . . 
The march of invention has clothed mankind with powers of 
which a century ago the boldest imagination could not have 
dreamed. But in factories where labor-saving machinery has 
reached its most wonderful development, little children are at 
work ; wherever the new forces are anything like fully utilized, 
large classes are maintained by charity or live on the verge of 
recourse to it ; amid the greatest accumulations of wealth, men 
die of starvation, and puny infants suckle dry breasts." 

Poverty is appalling, yet its true significance can be ap- 
preciated only when it is contrasted with prosperity. The 
association of poverty and progress is not only what Henry 
George called it, "the great enigma of our times," but unless 
the enigma can be solved, it will prove the undoing of any 
society that tolerates its presence. 

The man who has looked the issue in the face ; who has 
seen this affluence and that wretchedness; who has taken 
pains to inquire; who understands something of the reason 
for poverty and for riches; finds the juxtaposition of the two 
strange, absurd, grotesque, repulsive, abhorrent, intolerable. 
These two things, placed side by side, are an affront to his 
sense of justice as they are a challenge to his manhood. 

2. The Fruits of Poverty 

Poverty must be judged by its results. Like every tree, 
it may be known by its fruit. What are the fruits of poverty? 

The connection between poverty and vice and crime is 
difficult to trace. There are uncertainties and inaccuracies 
that cannot be completely cleared up. The relation between 
poverty and disease is unquestionable and unquestioned. 



A well-known tuberculosis expert recently said, "I go 
about talking against tuberculosis, advising good food, milk, 
eggs, fresh air, sunshine ; and while I am talking I know that 
on the wages they receive these people cannot possibly afford 
the things about which I speak." 

Some of the most remarkable figures that have appeared 
during recent years are contained in a study by the Federal 
Children's Bureau of infant mortality in Johnstown, Pa. They 
are doubly valuable at this point, since they cover children 
under the age of one year — children that cannot possibly be 
held responsible for the conditions in which their lives are 
laid. 

Every baby born in Johnstown in 1911 was followed up 
for one year. The results of the study are summarized thus : 
"The highest infant mortality rate is found . . . where the 
poorest, most lowly persons of the community live — families 
of the men employed to do the unskilled work in the steel mills 
and mines." "Prospect ranks next to Woodvale" with a death 
rate of 200 per 1,000 children born. The district "has not a 
single properly graded, drained and paved street. The down- 
town section, where are to be found many of the well-to-do 
people, has the lowest infant mortality rate in the city, it 
being but 50." Here is an adequate measure of the difference 
between the deaths of 200 and 50 babies in a thousand. The 
death rate among the poor is more than five times that among 
the well-to-do. 

3. The Extent of Poverty 

Poverty is prevalent. It is cursing whole sections of the 
population. The question of first importance is this : "Why 
is poverty?" 

The latest work that has been done on poverty makes it 
possible to say, unequivocally, that personal vices and per- 
sonal shortcomings are not the chief causes of poverty. In- 
deed, they are insignificant when compared with the larger 
social causes that are responsible for poverty. 

An examination of the figures cited in Bliss' "Encyclo- 
pedia of Social Reform" ; in Warner's "American Charities" ; 
in Devine's "Misery and Its Causes" ; or in the reports pub- 
lished by the larger charity societies indicates that the per- 
sonal shortcomings play very little part in the poverty that 
brings people to the charity societies. Social forces like un- 
employment, accidents, sickness, widowhood and the like are 
largely responsible for poverty. 

4. The Causes of Poverty 

Hollander, in his masterful summary of the causes of 
poverty, makes this statement: "The great supply-sources of 
poverty are the underpaid, the unemployed and the unemploy- 
able." Bliss, Warner and Devine set their standards largely 
in terms of pauperism. The people covered by the figures 



asked for help. Hollander is facing the matter in a broader 
way and making his estimates in terms of the entire com- 
munity. 

A moment's reflection will reveal the justice of Hollander's 
position. 

The facts regarding the relation between the cost of 
decent living and the wages paid by American industry have 
already been stated. Millions of adult male workers are re- 
ceiving a wage that cannot possibly support a family in 
physical health and social decency. It is this fact that leads 
Hollander to place the underpaid first as the chief supply- 
source of poverty. He writes : "Poverty, in its practical 
aspect, is a phase of the wage question. Large bodies of 
toilers are in receipt of income less than enough to maintain 
wholesome existence, and it is from this class that the mass 
of the poor are mainly recruited." 

— } The chief cause of poverty is low wages. People are poor S 
because the rate of wages paid by the industries of the United 
States will not permit them to be anything but poor. 

Those who have been in the habit of thinking of poverty 
as a result of personal vices, should reflect on the relations 
that actually exist between people in the various walks of life 
in present-day society. No group of people has a monopoly 
either on the vices or the virtues. Not all of the people who 
drink are poor ; not all vicious people are poor ; nor are all 
dissipated, extravagant, idle, shiftless, inefficient people poor. 
Such people may be found in every economic group from the 
poorest to the richest. There is one group of people who are 
always poor — the people who are paid less than a living wage. ,/ 
The relation between low wages and poverty is as intimate 
as the relation between cholera microbes and cholera. The 
poor are poor, in the first instance, because the wages they 
get are poverty wages. 

How inevitable, then, the conclusion which Professor 
Hollander sets forth on the next page of his book. "In the 
largest sense, it remains true that the most effective aid for 
those below the poverty line is the increase of income." 

Theoretically, the weak and the defenseless should be 
given special consideration. They are unable to take care of 
themselves adequately, and hence their fellows should care 
for them. Practically, the poor are exploited because they^ 
are poor. 

High prices and high rents are as effective in grinding the 
faces of the poor as are low wages. Both add to the intoler- 
able pressure that life places upon them. 

We eagerly seize the products of poverty. Many things 
are cheap because of the cheap labor done on them. Bargains 
are all too frequently tainted with the bitterness of poverty, 
yet people are glad to get bargains, without being over 
anxious to know their origin, lest their enjoyment of them 



might be decreased by the knowledge of conditions sur- 
rounding their origin. 

Low wages, high rents, high prices and bargains are some 
of the social forces behind poverty. Dives gains through low 
wages, lives on high prices and high rents and luxuriates on 
cheap, poverty-stained products. The well-to-do, respect- 
able part of the community depends for much of its comfort 
and respectability upon the exploitation of the poor. Low 
wages, high prices and cheap prices are approved, commend- 
ed, enjoyed and defended by those who reap the benefits from 
them. Meanwhile the weight of poverty rests a crushing 
load upon the poor. 

They are poor because wages are low and rents and 
prices are high. Their poverty makes possible the ease of 
the respectable and the well-to-do. The weight of civilization 
rests most heavily upon the backs of those who are, of all 
others, least able to bear its burdens. 

5. The Remedy 

Those who would get off the backs of the poor must see 
to it that the things supplied to the poor are good in quality 
and fair in price. If it is unjust to exploit the well-to-do, 
who can in a measure protect themselves, it is doubly unjust 
to exploit the poor who are defenseless. 

Above all else, if we would get off the backs of the poor, 
we must relieve the children of the poor of the intolerable 
burdens of poverty. They die in babyhood ; they are under- 
fed, ill-clad, badly housed and deprived of the manifold ad- 
vantages that flow from good home life. They must be fed, 
clothed, housed and given every possible educational advan- 
tage if they are to have even the semblance of a fair oppor- 
tunity in the race of life. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 
Questions : — 

1. What do we mean by poverty? 

2. What can you say regarding the existence of poverty 

in the United States — the richest of all the nations? 

3. Is there any poverty in your neighborhood? 

4. What effects does this poverty have upon adults? 

Upon children? On the neighborhood? 

5. Hollander calls poverty a "phase of the wage ques- 

tion?" Discuss this statement. 

6. Is there any relation between poverty and personal 

virtues or vices? 
References : — 

Encyclopedia of Social Reform — Bliss 
Misery and its Causes — E. T. Devine 
American Charities — Warner. 
The Abolition of Poverty — T. H. Hollander 

Copyright, 1919, by The Rand School of Social Science. ^H|j|£>92 



The Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

^e Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON VIII 

THE MAN HIGHER UP 

1. The New Feudalism 

The great leader is the great server. 

The leader derives his commission to leadership from the 
special qualities that enable him to be of service to his fellows. 
The commonwealth demands that the great burdens and the 
pressing issues of life be met. 

There is a saying that has come down from the time when 
the frontier was still a factor in national life, "There is plenty 
of room at the top." The truth is that the modern organiza- J 
tion of industry calls for a very few men at the top and a great 
many men below. 

The organized, highly specialized system of capitalism 
has created a new feudalism. The children of the men higher 
up have an excellent chance to succeed their fathers. The 
children of the men at the bottom of the pyramid or industrial 
organization have little real opportunity to do anything ex- 
cept follow in the footsteps of their fathers. The rewards of / 
the men higher up enable them to give to their children a 
generous taste of the good things of life. Many of the men 
at the bottom are fortunate if they can secure for their families 
the barest necessaries of existence. 

The room at the top is so narrow that the man at the 
bottom sees it as a hair-line. As the organization of industry J 
is perfected, even the hair-line dwindles. 

Under the centralization of industrial control in the hands 
of the financial interests there is little real independence in 
the business world outside of the men who wield financial 
power. And even these men must be described as interde- 
pendent rather than independent. 

The men highest up — the presidents, vice-presidents and 
general-managers — are bound together by the tenacious 
power of common interests and obligations. Common op- 
portunity and common necessity alike lead the men who 
occupy even the most exalted stations in the industrial world 
to depend upon their fellows for support and to accept their 
counsel in regard to all matters of moment. 

2. Property 
Perhaps among the important affiliations that tie the in- 
dustrial leader hand and foot, none is more omnipresent than 
the duty which he owes to "Property." Inevitably this is so. 
The managers, directors, superintendents and presidents are 
hired by the owners of the property to make the business 
pay — that is, to make it return money on the investment. The 
independent business man who, as he says, is not in business 
for his health, means to make his business pay. The leaders 



of industry are the representatives of property, and as such, 
their chief concern is to safeguard property interests. 

The leaders of industry owe their first allegiance to prop- 
erty. As an immediate result of this property-fealty, there 
has developed a virile class feeling among the leaders of in- 
dustry. 

The industrial leader is a part of the "system", in the 
same way that a man is a part of an order. Each group of 
people has its objects, and the object of capitalism is the 
making of profits, and the conservation of the propertied in- 
terests of the community. "Business is business," and the 
aim of all business is frankly recognized as the property re- 
turns which can be secured as a result of its operations. 

The man higher up is hedged about by an established 
order of business life. So long as he is willing to devote his 
energy to furthering the interests of the business world, he 
is free to do his utmost. Let him begin to tinker with the 
machinery; let him inject into his vocabulary such phrases as 
social justice, and he is at once an object of suspicion. Should 
he carry his iconoclastic tendencies so far as to threaten the 
smooth running of the business machine or to reveal its se- 
crets, he is a man proscribed. From that day forward, let 
him beware ! 

3. Scientific Management 

Scientific management, efficiency systems and business 
organizations still further reduce the initiative of the indi- 
vidual, whether he be high or low in the business world. 
The object to be attained by any of the devices for the 
improvement of business organization is the standardization 
of the work and the consequent reduction of the risk that 
is incident to the bad judgment of the individual. Risk is 
reduced. So is the free play of individuality. 

The industrial leaders, except for the favored few, are 
caught in their own levers and cogs. The under officers of 
industry — the foremen, superintendents and managers — are 
a part of a scheme that holds them to the accepted method of 
getting results. They are the subjects of the machine thatv 
they drive. 

4. The Lieutenants of Industry 

The under officers of a steel company or a railroad are 
the creatures of their businesses. Their clubs, churches, ideas 
and public utterances are hand picked. With the few rare 
exceptions that mark the rule, such men do not dare to express 
themselves publicly with regard to social, economic or political 
questions, unless they are acting as the mouthpieces of the 
company that employs them. They do not even dare to ex- 
press themselves in regard to their specialties, unless they are 
sure that there is nothing in their utterances that will in any 
way conflict with the policies of the company. 

The man half way up merges his personality with the 
industry in which he is employed. He subordinates to it his 
moral, intellectual, civic and social self at the same time that 
he subordinates his business self. 



True apprenticeship disappeared with the disappearance 
of the craft system of industry. Apprenticeship was possible 
while men practiced trades. Today there are practically none 
of the old hand trades, left. Industry no longer educates. It»/ 
specializes men. 

The answer of the industrial world to the charge that 
industrialism is not producing leadership is quick and final — 
"the problem of leadership is the problem of the schools." 
Some of the larger industries are maintaining schools in con- 
nection with their own businesses, but for the most part, the 
education of the prospective worker in industry will be given 
in the public educational system. 

5. The Schools 

Turn to the schools and the same pyramiding that is 
found in connection with the organization of industry is met 
with an extreme form. On the one hand, there are the few 
directors, or men at the top of the educational hierarchy, and 
the many teachers in the ranks. On the other hand, there are 
the many children in the lower schools and the few in the 
higher schools. Again there are the few teachers above the 
many children subject to their authority. The pyramid is 
still there, with its tiny apex and broad base. 

The teacher who becomes a part of the school system 
learns to do what she is told. If she teaches in a state like 
New York she is told by the Board of Regents, having charge 
of the educational work of the entire state. If she is a teacher 
in the schools of a large city, let us say Chicago, she is told by 
the city superintendent of schools. 

The teacher is provided with a course of study, and she is 
notified that a certain method is the approved method for the 
teaching of a given subject. Then, under the eye of a super- 
vising principal (foreman) and of a district superintendent 
(manager) she does her work. With the course of study 
prescribed and the method prescribed, the teacher has very 
little leeway. The elbow room that she might enjoy is re- 
duced because of a training in a formalized normal school that 
was designed to prepare the teacher for just this kind of a 
position. There are exceptional school systems and excep- 
tional teachers, but the great body of American school teachers 
have learned to do what they are told. 

The machinery of the public schools is formalized. The 
children are no less so. They climb from grade to grade along 
a carefully built ladder, that is constructed on the assumption 
that all of the children who use it are the same kind of chil- 
dren. If they are not of the same kind, there is something the 
matter with the children. Grade above grade they go, until 
they reach the high school, where the tensity of the strain is 
lessened, by a differentiation of courses. 

During the eight years of work in the elementary school 
the children have been subject to one of the most sacred of all 
of the educational fetishes — the fetish of "discipline". The 
petty virtues such as punctuality, neatness, and obedience are 
elevated to a post of supreme importance in the school room. 
For eight years the child is taught to do what he is told. 



6. The Factory 

The factory system finds its prototype in the school sys- 
tem. The man higher up gives the order. The teacher in 
the ranks obeys. The teacher passes the command on to the 
pupils, who accept her authority and do as they are told. 

The word that most nearly characterizes the public school 
system of the United States is "authority'V Children and 
teachers alike are taught to obey, without question, the direc- 
tions of those above them. The schools, more perhaps than 
any other institution, are inculcating in the American people 
an unintelligent respect for those higher up in the ranks of 
administrative power. 

The educational system is training for leadership to this 
extent — it educates those who can get from their homes suffi- 
cient food, clothing, stimulus and inspiration to stay in schools. 
The system is doing its best to pick leaders from among those 
who are in the schools. But in the higher years only a small 
fraction of the children ever enter. They are kept out by a 
lack of family income. 

The schools are the one public institution that may be 
relied upon to afford the opportunity that will yield the de- 
velopment of leadership qualities. Indeed, the public school is 
the only people's institution that there is. If the affairs of the 
state are to be administered democratically, if the name "Pub- 
lic Opinion" is to be more than a name, the public school must 
make the boys and girls who come to it think. 

The logical place for the provision of opportunity is the 
schools. If all are to have an equal right to the development 
of talents, that right must be based on the work that is given 
in the schools. 

Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 
Questions : — 

1. Do the men in your own shop or office rise to the 

higher positions in management? 

2. How often does this happen? 

3. Make a list of the chances that the various grades of 

workers have for advancement into higher grades. 

4. What is the relation between the theory of "Economic 

Determinism" and the position of the man higher 
up under capitalism? 

5. What is the democratic method of selecting leaders — 

superior to the aristocratic or hereditary method? 

6. If an election were held in your shop or office who 

would be made foreman? Who general manager? 

7. Do the "rich men" in America today owe their posi- 

tion in any sense to "democracy"? 

8. What would you say of the argument that if the 

workers elected their superior officers a cheap 
politician type would get into office? 
References : — 

Unto This Last — John Ruskin. 

Applied Sociology — Lester F. Ward. 

Copyright, 1919, by The Rand School of Social Science. «^S^ D 93 



Rand School Of Social Science Correspondence Department 

7 East 15th St., New York 

t^e Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON IX 

RICHES 
1. Working and Owning a Living 

Poverty is an individual curse and a social sin. It blights 
and destroys the lives of its victims. It is a disease, and ex- 
isting, as it does, side by side with the unparalleled increase 
in productive power that has resulted from the use of the ma- 
chine, it challenges civilization. 

Poverty is an outstanding feature of present-day civiliza- 
tion. So is riches. 

A very small number of people are rich. In olden times, 
to be rich meant to have plate, bullion, jewels and sometimes 
great landed estates as well. The rich man today is in a very 
different position. 

Incidentally, the modern rich man may have a supply of 
plate, bullion and jewels, but in the first instance he secures 
possession of income-yielding property — stocks, bonds, mort- 
gages and the like. 

There are two ways in which a man may make a living. 
He may work for it or he may own for it. The worker re- 
ceives an income because of some service that he renders. 
The owner's income is based on his ownership. 

The contrast may be illustrated in this concrete manner. 
Here is a man who manages a signal tower for the railroad 
company. Each year he receives $1,000 for services. Yonder 
a man owns $20,000 of the railroad company's five per cent 
bonds. He receives $1,000 a year for his ownership. The 
towerman is paid because he works. The bondman is paid 
because he owns. 

The claim of the property owner is prior and is perpetual. 
Modern business is so organize 1 that the first shock of indus- 
trial depression is carried by the discharged workman. The 
dividends may be paid on the stocks. The interest will be 
continued on the bonds. The first burdens of industrial hard- 
ship are saddled on the wage-earner. The rich man who 
invests his money carefully is a thousand times more secure 
than the worker who is engaged in the productive work of 
the community. 

The wealth machine, enabling some to live by owning 
upon the products made by those who live by working, has 
produced no more vicious results than this — the workers suf- 
fer hardship while the owners bask in nameless luxury. 

2. The Effects of Riches 
An attentive listener to the teachings of American life 
might easily assume that the rich were unquestionably bene- 



ficiaries of their riches. Nothing could be farther from the 
truth. The most immediate result of riches is their disastrous 
effect on the rich. 

All normal men and women have a greater or less amount 
of creative impulse — of yearning for self-expression. This 
self-expression is the outward manifestation of their spiritual 
selves. When they are children, they plan, build, decorate 
and play. As they grow older, they turn to more permanent 
forms of activity — inventing, painting, organizing, directing, 
planning and building tools, machines, pictures, businesses, 
cities and nations. Shelly wrote because he must write : 
Franklin experimented scientifically because the spirit within 
him would not be gainsaid. It was the manners of Lincoln's 
soul that carried him to the fore. These things are in the man. 

Human faculties, including the will, grow stronger 
through use. Activity is the law of life. Truly said Faust, 
"In the beginning was the deed." 

Poverty starves initiative. Riches surfeits it. Both, in 
the end, destroy it. 

The rich learn to depend upon others. The boy, born into 
a rich family, who has someone at hand to fetch and carry for 
him, is denied the education that comes through doing. In- 
stead of being stimulated to press forward in this direction or 
that, he is urged to "let James do it". 

The rich, particularly in the second generation, are not 
called upon to achieve anything. They are relieved from the 
necessity of exertion. Their power of initiative atrophies. 
They never learn success. This denial of achievement under- 
mines the self-respect of the rich and is one of the surest ex- 
planations of that profound dissatisfaction, world-weariness 
and ennui that is the spiritual scourge of the well-to-do. 

Stevenson, in that inspired passage at the end of his essay, 
''Aes Triplex," tells what, in his estimate, it means to die 
young. The triumphant soul has barely finished its work. 
; 'The sound of the mallet and hammer are scarcely quenched," 
when the spirit, in the high tide of its being, "shoots into the 
spiritual land." 

The hand of riches is as palsied as the hand of old age. 
Gradually, piece by piece, it wears down the foundations of 
self-respect until the rich man finds himself alone with his 
riches. 

There is an element of contradiction, as well as of un- 
assailable truth in the phrase "The Pauperizing Power of 
Riches." Yet, equivocal as it may seem, riches does pauperize 
the rich. 

What does "pauperize" mean? 

The rich are most solicitous about the poor. Whatever 
happens they must not be pauperized. There is a danger of 
pauperization in all forms of philanthropy and charity. School 
lunches pauperize the children ; mothers' pensions pauperize 
the families; all forms of assistance given to individuals at 
public expense pauperize the individuals — that is, it renders 



them less capable of self-support. Pauperize means "to lead 
one person to depend for support on another ; to make de- 
pendent." 

Riches pauperizes. 

The children of rich people, and to a less extent the rich 
people themselves, learn to depend on others for their support. 
Servants wait on them ; the world of productive industry- 
supplies them with the things that they use. Riches tends to 
make the rich incapable of self-support. There are in riches 
the worst features of pauperization against which the rich are 
constantly seeking to guard the poor. 

The burden of riches rests heavily upon individual initia- 
tive and self-respect. Riches leads to dependence — inability 
for self-support. Riches pauperizes. 

Riches isolates the rich as completely as though they 
were set upon an island of gold in the midst of a boundless 
ocean. The rich may have their friends among the rich, but 
they cannot reach the heart of humanity. 

Philanthropy is the effort of the rich to establish human 
relations with the rest of mankind. As such, it is perhaps the 
most arid failure of the century. 

Riches saps initiative, undermines self-respect and pre- 
vents the rich man from enjoying human relationships. To 
the extent that riches does these things it is disastrous to the 
individual who is rich. 

Riches leads those who are rich toward physical and 
spiritual death. Likewise, it leads the community toward the 
social death that is a necessary product of parasitism. 

Riches is a purely relative term. Not only is it true that 
the heaven of the rich is built upon the hell of the poor, but 
unless there were a hell of poverty there could be no heaven 
of riches. 

The terms "rich" and "poor" are opposites in the same 
sense that the terms "north" and "south" are opposites. Were 
the south eliminated, there could be no north. The existence 
of the one presupposes the presence of the other. 

Ruskin states the matter thus : "Men nearly always speak 
and write as if riches were absolute, and it were possible, by 
following certain scientific precepts, for everybody to be rich. 
"The force of the guinea you have in your pocket depends 
wholly on the default of a guinea in your neighbor's pocket. 
If he did not want it, it would be of no use to you ; the degree 
of power it possesses depends accurately upon the need or 
desire he has for it and the art of making yourself rich is 
therefore equally and necessarily the art of keeping your 
neighbor poor." 

The poorer the neighbor, the more powerful is the rich 
man. The contrast between the poverty of the poor and the 
riches of the rich is the measure of the power that the rich 
can exercise over the poor. The greater the contrast, the 
greater the power of the rich. 



w/ Unless riches carry with them power over men, they are 
meaningless. No rich man would hold title to mines, steam- 
ship lines or metropolitan real estate unless they gave him 
this power. 

A man owns a great estate on which there is a splendid 
mansion, fine stables, houses, cattle, orchards, fertile fields. 
One day a pestilence kills off the men and women who have 
been working on the estate. There are no more servants to be 
had, and the owner decides to keep up the property himself. 
What does he discover? That if he is a good workman, well 
equipped with up-to-date tools, his own efforts will maintain 
from one to five acres of land in a state of high cultivation, 
while the mansion, the stables and the rolling fields grow up 
to briers and thickets, and in a decade become a wilderness. 
The estate that one man can work is small indeed. Only 
when he can persuade others to accept a part of his riches in 
return for their services can he expect to be rich. 

Note the conclusion to which this argument leads : "What 
is really desired, under the name of riches, is essentially power 
over men ; . . . And this power of wealth, of course, is greater 
or less in direct proportion to the poverty of the men over 
whom it is exercised, and in inverse proportion to the number 
of persons who are as rich as ourselves, and who are ready to 
give the same price for an article of which the supply is lim- 
ited ... So that, as above stated, the art of becoming 'rich,' in 
the common sense, is not absolutely nor finally the art of ac- 
cumulating much money for ourselves, but also of contriving 
that our neighbor's shall have less. In accurate terms, it is 'the 
art of establishing the maximum inequality in our own favor.' " 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions : — 

1. If someone offered you $100,000 worth of railroad 

bonds would you take them? W T hy? 

2. What would you like to do with the income ($5,000 

per year) from these bonds? 

3. What would you actually do with this income? 

4. Would the possession of a $5,000 assured income 

change your views of life? Would it change the 
view of your children? 

5. Explain the process by which "rich" people secure 

their income through the ownership of property. 

6. Was Solomon right when he said, "Give me neither 

poverty nor riches"? 

References : 

The Philosophy of Wealth— J. B. Clarke. 
Wealth and Life — J. A. Hobson. 
Unto This Last — John Ruskin. 

Copyright, 1919, by The Rand School of Social Science. "£^^^>33 



EXAMINATION III 

Note. — These questions are to be answered in writing and 
are to be sent to the school for correction and rating - . 



1. In what sense is poverty a social disease? 

2. How is it possible to have poverty and prosperity in 
the same community at the same time? 

3. Tell why owning for a living is a menace to com- 
munity life. 

4. Is the concentration of wealth in the hands of a few 
compatible with our ideas of democracy? 

5. Does an increase in national wealth necessarily mean 
prosperity for the people? 

6. Why have the owners of wealth in the United States 
such large quantities of surplus seeking for investment. 



The Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

^e Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON X 

IS THERE ENOUGH FOR ALL? 
1. The Economic Surplus 

The advocates of reform are frequently met with the re- 
tort that there is not enough wealth in the world to give 
everyone a decent living. This being true, they insist, how is 
it possible to inaugurate the kind of a society that the Social- 
ists demand? Some people must be deprived of the neces- 
saries of life. Then why disturb the present order of society? 
There will be poverty under Socialism just as there has been 
under capitalism. We always have the poor with us and 
always will as long as human nature remains what it is. 

That discussion raises the whole question of the available 
economic surplus. 

Before the inauguration of Capitalism the economic sur- 
plus was very small. It required the entire time and energy 
of a great many workers to maintain a few idlers in ease and 
luxury. Machinery has settled that question. 

We have already learned that the machine is a wonderfully 
efficient servant. It creates vast stores of wealth which could 
never have been made by the unaided hand of man. 

2. The Effectiveness of the Machine 

The effectiveness of the machine as a wealth producer is 
shown in the increase of the total national wealth. Between 
1850 and the present time the population increased four fold 
and the national wealth thirty-four fold, so that the wealth 
has increased eight times as rapidly as the population. 

Even more significant, are the figures showing the in- 
crease in the net income of the country. These figures are 
made up by taking the total amount added to the value of 
products by labor in a given year. 

The first figures showing national income for the United / 
States are for 1890. At that time the total net income of the J 
country was a little over nine billions. Then, for a series of 
years it remained almost stationary. In 1895 it had decreased 
to eight billions four hundred millions. This was a year of 
hard times. By 1900 the national income had risen to twelve 
billions nine hundred millions. From that time on it has in- 
creased very rapidly. 

The year 1898 is a vitally important one in American 
economic history. With the Spanish-American War America 
ceased to be a borrowing nation and became a lending nation. 



Since that time we have always been in a position where we 
could supply surplus wealth to peoples outside of the United 
States. 

By 1910 the total net income had risen to thirty billions, 
by 1915 it was thirty-five billions and by 1918 seventy-three 
billions. In other words the total net income was eight times 
as great in 1918 as it was in 1890. 

During this time the workers of the United States have 
been struggling for an increase of their wages. Sometimes 
they have received a 10% increase; sometimes a 20% increase. 
Wages in the United States are probably 40% or 50% higher 
in 1918 than they were in 1890. The total net income of the 
country is 800% higher. The population is increased 60%. 
The net income has increased eight fold. 

These figures present a picture of prosperity without 
parallel in the history of economic developments. The growth 
of wealth in England between 1760 and 1830 was extremely 
rapid. But not even in those prosperous years did the English 
industries pile up such huge quantities of surplus wealth as 
have been piled up by the American industries during the past 
generation. For every dollar of net income that the United 
States enjoyed in 1890 there are approximately eight dollars 
today. For every dollar of wealth in the country in 1850 
there are over thirty dollars today. This increase is little 
short of marvelous. 

Nor is there indication that the increase will not continue 
in the coming years. Undoubtedly, there will be set-backs, 
but unless there is a complete disintegration of the American 
productive machine, the wealth of the United States in 1950 
will be as much greater than the wealth today, as the wealth 
today is greater than in 1870 or 1890. 

3. Potential Productivity 

At the present time only a fraction of the total number of 
people who might work actively in productive industry are so 
engaged. If all of the able-bodied men and all of the able- 
bodied women in the country were to spend their time at some 
form of productive occupation, the productivity of the com- 
munity could be enormously increased even with the present 
standards of efficiency. 

Charles P. Steinmetz has calculated that if every able- 
bodied adult in the United States were to work half a day for 
200 days a year, it would be possible to produce all of the 
wealth now turned out. This would give each person a week 
of rest at each important national holiday and three months 
vacation in the summer time. Similar calculations have been 
made by other experts. These systems vary in detail, but in 
the main they emphasize the same conclusion, which is, that 
industry at present is sufficiently productive to provide all of 



the necessaries and simple comforts of life for every individual 
in the community. 

Taking the total number of families in the country at 
21,000,000, it is apparent from the figures already given that 
the average wealth of the United States per family is about 
$12,000; and that the average income per family is about 
$3,500. Of course, most of this wealth is productive wealth 
and a portion of this income must be turned back into indus- 
trial channels. Nevertheless, the fact that this country has 
sufficient surplus wealth to put more than $20,000,000,000 into 
the war during a single year, is in itself sufficient indication of 
the resources that lie at our disposal. 

4. Concentration of Wealth 

The national income has increased. The increase has 
gone to the favored few. According to the United States 
Commissioner of Internal Revenue, there were 5,214 million- 
aires in the United States in 1913-14 and 17,085 in 1916-17. 
At the present time the number is probably doubled this latter 
figure, or in the neighborhood of 35,000. 

The latest detailed report published by the United States 
Commissioner of Internal Revenue deals with the figures for 
1916-17. In that year there were 429,401 persons in the United 
States receiving incomes of more than $3,000 if single and 
more than $4,000 if married. The total income received by 
these individuals was slightly more than $8,000,000,000 or an 
average of about $20,000 per individual. 

The larger incomes went to a surprisingly small number 
of persons. Thus, there were only 121,691 persons with in- 
comes of $10,000 and over, — that is, only about twelve out of 
ten thousand of the population were more than moderately 
well-to-do. 

On the other hand 6,633 individuals received incomes of 
$100,000 a year and over and 582 individuals had incomes of 
$500,000 a year and over. There were 120 with incomes of 
over a million dollars and ten with incomes of $5,000,000. 
Among the individuals who received the higher incomes 
practically the entire amount came from rent, interest, divi- 
dends and profits. 

It seems very clear from these figures that the increasing 
surplus of the United States has been going into the hands of 
a small fraction of the total population. The wages of the 
working class have increased, but hardly more than enough 
to keep pace with the rising cost of living. The incomes of 
the few have risen enormously, eating up the increase in pro- 
ductivity. 

There is enough to go around in the United States ! The 
yearlv surplus is probably somewhere in the neighborhood of 
$15,000,000,000 or $20,000,000,000. That is enough to give 



every family from $750 to $1,000 additional income per year. 
The few receive this surplus, while the many live on a sub- 
sistent wage or less. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions : — 

1. Machine production has greatly increased the pro- 

ductivity of industry. In what sense has this made 
possible a greater surplus? 

2. Have the working people of the United States shared 

in the wealth increase of the past thirty years? 

3. Are there rich people in your community? How do 

their incomes or their wealth compare with the 
incomes and wealth of the workers? 

4. What is the source of their incomes? 

5. What is the form of their wealth? 

6. If the ownership and control of industry were turned 

over to the workers in your community, could 
they increase productivity in any way? 

7. How could they divide up the income more success- 

fully? 
References : — 

The Wealth and Income of the People of the United 

States— W. I. King. 
The Distribution of Wealth— F. H. Streightoff. 
Income — Scott Nearing. 



Copyright, 1919, by The Rand School of Social Science. 



Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

"ffie Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON XI 

ECONOMIC CITIZENSHIP 
1. Democracy 

The ideas and ideals that lie at the foundation of the 
democratic thought of the United States are common to the 
democratic thinkers of Canada, Australia, Switzerland, France 
and England. They have been popularized by certain catch 
phrases that carry them to the minds and hearts of the citi- 
zenship. 

The most commonly accepted of the ideals upon which 
American democracy was built is summed up in the phrase, 
"The equal right of all people to life, liberty and the pursuit 
of happiness." Human beings differ physically and intellect- 
ually. No one hopes or even pretends that people can be made 
equal. It is proposed to equalize opportunity. The men and 
women who founded the American Colonies fled from a civili- 
zation in which there were hereditary inequalities of oppor- 
tunity. In their new homes, they dedicated themselves to the 
task of giving equal opportunity to all of the sons and daugh- 
ters of men. There was to be no special privilege. All were 
to be started fair in the race of life. 

The ideal of equal opportunity is one of the most brilliant 
dreams that ever came into the human consciousness. It 
makes room for the individual soul at the same time that it 
calls to the front the men who are best fitted to do the tasks 
of the world. 

A second ideal of the early American democracy was 
aptly summed up in the phrase, "He that will not work, neither 
shall he eat." Citizens of a democracy must assume the re- 
sponsibilities of citizenship under pain of missing its benefits. 

Conversely, the government in a democracy must serve 
the citizenship. In its early expression, this thought takes 
the form, "Taxation without representation is tyranny." Those 
who pay the piper should call the tune. Later the expression 
appears as "A government of the people, by the people, and 
for the people", — a people's government. A people's govern- 
ment can know only one duty — the service of those who sup- 
port it. 

Then, in the fourth place, the democracy will "put the 
man above the dollar," because, in a democracy, the important 
values are the human values; the great rights are the human 
rights. Therefore, the rights of men and women will come 
before the rights of property. 

Here are four of the basic democratic concepts — equal 
opportunity, civic obligation, popular government and human 
rights. They were sound as tests of political democracy. 
Perhaps they may be equally useful in testing the democracy 
of industry. 

These ideals of democracy were applied to the political 
affairs of the community. Now that a great new force has 
arisen, the same ideals of democracy must be applied to the 
industrial system, or else other ideals must be formulated that 
are more adequate to express the relation between the people 
and the living force. 



2. The Industrial Revolution 

Within a century the political functions of society have 
been pushed into the background, and in their places are the 
industrial forces, easily dominating, in their importance, every 
other activity of the community. Large scale industry has 
come to stay. It is an integral part of social life. It must be 
made a servant of man. How shall this admittedly desirable 
end be brought about? How but by the very process that in 
past years forced political government to accept community 
service as its declared standard. The capitalist system 
drives a hard pace; it pays indecently low wages; it 
racks its leaders as it does the subordinates ; it continues pov- 
erty in the presence of plenty ; it permits piled up riches in the 
hands of a few. The system evidently has not brought "the 
greatest good to the greatest number." Low wages, over- 
work, distorted individuality, poverty and riches have no place 
in a democracy. 

The real light for liberty of opportunity at the present 
time centers about the economic world. It is there that the 
next battle for liberty will be lost or won. 

The leaders of the economic world have learned the im- 
portance of public opinion. Even if they believe that the 
public should be damned, they no longer say so. On the 
contrary, they are resorting to every device to win public 
opinion for their own. "The public be served," is their motto. 

The attitude is easily explained. During the seventies, 
eighties and nineties, when the great aggregations of private 
capital were being built up, there was no need to worry about 
public opinion. The public was watching, mouth agape, the 
sleight-of-hand performances of the wonder-workers, who 
could build a city over night, with its rattling machinery and 
roaring forges. Later, when it came to paying the bill, the 
public began to take an active hand in business affairs; and 
now that it has become a question as to whether the people or 
the great corporations shall control the country, the corpora- 
tions are using every device to win public opinion, which is 
the key to the situation. 

The channels of public opinion are already well in hand. 
The bar, the pulpit, the college chair, the press, are all dis- 
tinctly conservative. That is, content to let well enough 
alone. There are radical and even revolutionary elements in 
all of these institutions for the shaping of public opinion, but 
the tone of the institutions is conservative. In all of them, at 
the present time, the younger element is voicing an energetic 
protest. In all of them, the conservative forces are bringing 
the most terrific pressure to bear to keep the younger men in 
line. 

3. Industrial Democracy 

During the past few years radicalism seems to have 
gained in all directions. More frequently, pleas for justice are 
heard from lawyers; pleas for truth from ministers and. teach- 
ers. The dead things of the past seem to be losing some of 
their power ; the living things of the present and of the future 
seem to be gaining. 

Still it remains true that those who speak in favor of 
things as they are "get space", while those who speak on the 
other side are tucked into a corner or else ignored. The fight 
is not yet won — it is hardly well begun. 

The men who wish to organize a union are no longer 



jailed for conspiracy, but "the forces of law and order" are 
lined up against them and they are hampered in every di- 
rection. 

The most effective bribe is the bribe of a job. There is no 
hush money like the pay envelope. At the present time the 
surplus of labor is permitting the employing world to dis- 
criminate harshly against the man who is organizing with his 
fellows into any form of labor organization. 

The liberty of the employer to organize in trade bodies is 
commonly accepted. The rights of the workers in the same 
direction are, in many districts and in many trades, ignored 
or ruthlessly denied. 

The poor and the rich are not equal if equality is measured 
in terms of infant death rates, of sickness rates, of educational 
advantages and of opportunities to start the race of life. There 
is an even broader sense in which there is gross inequality as 
between poor and rich. 

Broadly speaking — and this statement must be broadly 
construed — the poor are the workers and the rich are the 
owners. The poor give the great part of the human service ; 
the rich control most of the productive machinery. 

The poor own. They own their clothing, their kitchen 
utensils and house furnishings. Frequently they own their 
own houses. But in the vast majority of cases they do not 
own stocks, bonds or any other form of title to the railroads, 
mines, factories and stores for which they work. These titles 
are held by the rich. 

Not all of those who work are poor, but the vast majority 
of those who are poor work for wages. It is only a vanishingly 
small proportion of the poor who live on the community with- 
out engaging in productive toil. The Johnstown report pointed 
out the fact that where the infant mortality was highest there 
lived the "families of the men who do the unskilled work in 
the steel mills and mines." The poor are the workers, in 
Johnstown and elsewhere. 

Many of the rich — probably most of the rich men — are 
workers, but their riches consist, not primarily in the salary 
or returns for services, but in the income that they derive for 
their ownership of income-yielding property with which the 
poor must work if they are to live. 

Riches, in so far as it consists in "establishing the maxi- 
mum inequality in our own favor," is diametrically opposed to 
equality of opportunity. Riches, in this sense, is as far from 
democracy as the east is from the west. 

Moreover, when it is remembered that the rich own the 
property with which the poor must work for a living, and 
that, in return for this ownership, they expect a return in the 
form of rent, or interest, because they are the owners, and 
that the poor, who work with and live upon the property of 
the rich, must pay them a return out of the products of their 
work, it becomes apparent that the private ownership of in- 
come-yielding property creates an impossible barrier of special 
privilege between those who work and those Avho own the 
property on which the work is done. Unless all are owners, 
those who own may and do exact a tribute from those who 
work, so that the harder the worker works and the more 
product he turns out, the greater is the gulf between the op- 
portunities of him who works and him who owns. 

Those who own income-yielding property that is the 



product of their own accumulation and who may therefore 
live upon the income from this property without themselves 
doing any work, hold a means of enforcing inequality as be- 
tween themselves and the workers. Those who inherit in- 
come-yielding property start the race of life with an assured 
livelihood, while the children of the workers must produce 
sufficient wealth to provide for their own necessities and to 
pay the interest and dividends on the property held by the 
sons of the rich. Thus the workers, in the race of life, must 
run their own race, carrying, meanwhile, the property owners 
who need do no work. Among these workers are many poor 
upon whose backs sit the few rich. 

There is a forceful statement of the contrast in Ruskin's 
"Unto This Last." "It has long been known and declared 
that the poor have no right to the property of the rich. I wish 
it also to be known and declared that the rich have no right to 
the property of the poor." While the poor, who work for a 
living, are compelled to support the rich who own for a living, 
it is idle to talk about equal opportunity for livelihood. 

One frequently hears the attitude of the wage-earner de- 
cried. He soldiers. He does not deliver a fair day's work. 
Such critics would be vehement indeed if the wage-earner 
proposed to get his pay without doing any work. Yet this is 
exactly the proposition that the owners of income-yielding 
property are demonstrating every day that they live on their 
ownership. There is probably no force more utterly demoral- 
izing than the efforts of a part of the population to live, with- 
out working, upon the labor of another part. Despite this 
quite obvious fact, the United States is today engaged in 
building up an economic system that guarantees a far better 
living to the rich loafer than it pays to the honest worker. 

When Feudalism was decaying and breaking up, the 
people found a remedy. Their liberties were curtailed and 
denied ; they were coerced and oppressed. They found a rem- 
edy, however, in political citizenship. 

The time has come when capitalism, decaying and break- 
ing up, denies liberty and oppresses the people on the eco- 
nomic field. There seems to be but one logical remedy — 
economic citizenship. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 
Questions : — 

1. Mention some of the ideals of political democracy? 

2. Can equal rights be given in economic as well as in 

political life? Tell how. 

3. Does the monopolist tax the public? What repre- 

sentation has the public when it comes to spending 
monopoly profits? 

4. What do we mean by popular government in indus- 

try? Do you believe that the workers are compe- 
tent to decide important industrial questions? 
References : — 

Pay Day — C. H. Henderson. 

Socialism — John Spargo. 

Self-Government in Industry — G. D. H. Cole. 

Democracy After the War — J. A. Hobson. 

The Social Problem — J. A. Hobson. 

Copyright, 1919, by The Rand School of Social Science. rC£'" 



The Rand School of Social Science Correspondence Department 

7 East 15th St., New York 

t|fe Human Element in Economics 

Twelve Lessons prepared by SCOTT NEARING 
LESSON XII 

THE PRACTICE OF INDUSTRIAL DEMOCRACY 
1. A House Divided Against Itself 

The government of the United States is a people's govern- 
ment. That is, it is organized on the general democratic pro- 
position of the greatest good to the greatest number. The 
greatest number of the American people are wage-earners or 
lease-holders, who are using the property of others in the 
gaining of a livelihood. The American government, in order 
to be democratic, must apply this principle to the industrial 
world. 

In the first place, it must be quite apparent, without any 
argument, that industry is utterly undemocratic in its present 
organization. 

Democracy presupposes control by the people — the ma- 
jority of people. As it has been worked out in modern society, 
it means the selection, by the people, of representatives who 
act for their constituency. This type of representative democ- 
racy has been accepted as a matter of course in politics. In- 
dustry, meanwhile, is under the almost complete control of a 
non-representative and non-responsible plutocracy. 

With the exception of a very mild form of regulation exer- 
cised by state and Federal government over certain of the 
more important public utilities, those who own the industries 
control them as absolutely as the owner of a dukedom in 
medieval Germany controlled his estate. The modern wage- 
earners are not attached to the industry as the medieval serfs 
were attached to the land, but while they continue to work in 
an industry they are subject to the dictates of the owners of 
the industry. 

The corporation is the clearest type of this relation be- 
tween ownership and industrial control. The stockholder — 
the owners of the corporation — select a board of directors 
whose duty it is to manage the affairs of the property. The 
directors, in turn, designate certain administrative officers who 
carry on the active business of management. Not once are 
the workers consulted regarding any matter of industrial 
policy. They have no say, either in the selection of the offi- 
cials or in the determination of the things that are to be done 
by the officials. The workers in a modern industry are just 
as far from having a say in industrial affairs as were the serfs 
of medieval Europe from participating in the affairs of the 
estates on which they worked. 

It seemed almost idle to reiterate such statements. They 
are so obvious. No worker supposes that he has a say in 
business policy. No owner of business property pretends 
that the workers have a say in business policy. At the same 
time most people fail to realize the absolute negation of de- 



mocracy that is involved in the present-day system of indus- 
trial organization. 

Industry is not only undemocratic in its internal organi- 
zation, but it has actually presumed to reach out and lay its 
hands on the political government for the furthering of its 
own interests. Thinking people cannot listen with anything 
short of alarm while the President speaks to Congress of the 
possibility that employers will allow the young men in their 
employ to take a few months for military training, saying, "I, 
for one, do not doubt the patriotic devotion either of our young 
men or of those who give them employment — those for whose 
benefit and protection they would enlist." It may be news to 
many people in the country that military preparedness is for 
the benefit and protection of the employing class, yet the 
President makes the point quite frankly. 

To those who have followed the recent controversies be- 
tween labor and capital, it is no news that the power of gov- 
ernment has been used almost universally on the side of capital 
and against labor. Shortly after the recent outbreak in Colo- 
rado, the Governor (Ammons) wrote an article for the North 
American Review in which he discussed the whole situation. 
When the Governor referred to "rights" he meant the rights 
of property; when he referred to "wrongs" he meant wrongs 
against property. In the subsequent testimony it was clearly 
brought out that certain of the mining companies had been 
for years deliberately violating the state mining laws. As a 
result of these violations, the lives of the miners were jeopar- 
dized. When these matters were brought to the attention of 
the Governor, he made no outcry against "wrongs" and in 
favor of "rights". He sent no militia to- place the mine com- 
pany officials under arrest until the conditions were remedied. 
The safety and even the life of the miners was endangered; 
the state took no action, but the moment that the property of 
the operators was threatened the officials acted. 

The same thing held true in West Virginia. Frightful 
explosions, resulting from deliberate neglect of official warn- 
ings, cost scores of lives without causing more than a ripple 
in officialdom. The moment the property of mine owners was 
threatened, the militia was called out, martial daw was de- 
clared and the military courts railroaded cases that might 
have been as readily disposed of by civil procedure. 

While the workers of the United States have been strug- 
gling to overthrow some of the most primitive forms of in- 
dustrial autocracy the workers of Europe have been coming, 
with rapid strides, into their own. For many years it has 
been generally understood that the labor movement in Europe 
was more highly developed than the labor movement in the 
United States. The four bitter years of war experience stimu- 
lated this development to a very great degree. 

In March, 1917, the Russian people sent their Czar into 
exile. On November 7th, 1917, all the workers of Russia pro- 
claimed an industrial democracy. For the first time in the 
history of Capitalism the workers themselves took over the 
machinery of production, declared an end to unearned in- 
come and through a democratic form of economic organiza- 



tion, known as Soviet, undertook to manage economic affairs 
directly from and by the workers. 

2. The Industrial State 

The workers of Russia adopted a constitution in July, 
1918, which represents and attempts to put into practice 
some of the principles of industrial democracy. 

The Bill of Rights which forms article one of the Russian 
Constitution declares that the workers of Russia must own 
their own jobs and that they alone must manage Russian 
affairs if human liberties and social justice are to be guaran- 
teed and preserved. 

To this end the dictatorship of the proletariat is estab- 
lished because "during the progress of the decisive battle be- 
tween the proletariat and its exploiters, — the power must be- 
long solely to the toiling masses and to their plenipotentiary 
representatives." The exploiters cannot hold a position in 
any branch of the Soviet Government. 

The Soviet Constitution thus draws this fundamental 
distinction between those who work and those who exploit. 
The workers are the government. The exploiters are outlawed. 

The Russians have carried this principle so far that in 
providing for the franchise they declare that "all who have 
acquired the means of living through labor that is productive 
and useful to society" ; "soldiers of the army and navy" ; and 
citizens who have "to any degree lost their capacity to work 
are eligible to the franchise". Furthermore, that the right to 
vote is denied to those who employ labor "in order to obtain 
from it an increase in profits" ; "those who have an income 
without doing any work" ; "private merchants, trade and com- 
mercial brokers" ; "monks and clergy of all denominations" ; 
"employes and agents of the former police" ; "secret service 
and the former reigning dynasty" ; insane persons ; persons 
who have been deprived of their rights of citizenship because 
of criminal offenses. 

Chapter one of the Russian Declaration of Rights estab- 
lishes "a republic of the Soviet of Workers, Soldiers and 
Peasants Deputies". This Republic is organized on the basis 
of a free union of free nations. The workers in any one of 
these free nations may at any time decide "whether or not they 
desire to participate, and on what basis, in the federal govern- 
ment and for federal Soviet institutions." 

The second chapter of the Declaration of Rights provides 
for "the abolition of exploitation of men by men, the entire 
abolition of the division of the people into classes, the sup- 
pression of exploiters, the establishment of a Socialist society, 
and the victory of socialism in all lands. ... By declaring that 
all private property in land is abolished, that the entire land 
is declared to be national property and that it is to be appor- 
tioned among husbandmen without any compensation to the 
former owners in the measure of each one's ability to till it." 
Likewise, all natural resources are declared to be national 
property; as are the factories, railroads, banks and other or- 
ganizations of capital. Furthermore, "universal obligation to 
work is introduced for the purpose of eliminating the parasitic 



strata of society and organizing the economic life of the 
country." Furthermore, all workers are to be armed and all 
members of the property class are to be disarmed. 

These are but instances of the thorough-going manner in 
which the Soviet Constitution approaches the problem of dis- 
establishing the established order of capitalistic society. The 
application of the principles embodied in this Soviet Consti- 
tution whether made in Russia or elsewhere means inevitably 
the overthrow of capitalist and class government and the es- 
tablishment of an industrial democracy. 

The French Revolution ushered in political democracy. 
The Russian Revolution began the movement toward indus- 
trial democracy which has spread so rapidly over Europe 
during the succeeding months. 

The old form of industrial control based on the power of 
wealth was a plutocracy. The new form based on the sov- 
ereignty of the workers is a democracy. 

The plutocracy bases its power on some form of special 
privilege. The democracy stands for equality of opportunity. 
Special privilege is to democracy as the east is to the west. 
They cannot exist together. If special privilege is to dominate, 
equality of opportunity must be denied. If equal opportunity 
is to be the rule of the community, special privilege must go. 

The struggle between plutocracy and democracy is a 
struggle for life and death. One must survive, the other must 
be destroyed. 



Note. — These questions are intended for the guidance of 
the student and are not to be answered in writing and sent in 
to the school for correction. 

Questions : — 

1. Labor solidarity or class consciousness is the first 

essential for the practice of industrial democracy. 
How is this class consciousness to be developed? 

2. What forces have compelled the leaders of industry 

to try to dominate political life? 

3. Can human rights be made superior to property 

rights ? 

4. Why should the workers of Europe be more active 

than the workers of the United States in establish- 
ing industrial democracy? 

5. The Soviet Government in its constitution seeks to 

establish an economic basis for free speech by 
providing free halls for the workers. Is this wise? 

6. Can the Soviet principle be applied in the United 

States? 

7. Work out a scheme for organizing a Soviet in your 

own town. 
References : — 

Self Government in Industry — G. D. H. Cole. 
Capital (1st volume) — Karl Marx. 
Democracy After the War — J. A. Hobson. 

Copyright, 1919, by The Rand School of Social Science. «Sg|[|fei>93 



EXAMINATION IV 

Note. — These questions are to be answered in writing and 
are to be sent to the school for correction and rating - . 



1. Does an increase in national wealth necessarily mean 
prosperity for the people? 

2. Is enough wealth produced in the United States to 
provide for the well-being of all the workers? 

3. What are the chief differences between the purposes 
of the political State and the purposes of the economic state? 

4. In what way does private ownership of the tools of 
production make for inequality. 

5. What is class consciousness? How can class con- 
sciousness be developed? 

6. What is the Soviet principle of Government? 

7. Must the struggle between the plutocracy and workers 
continue until one or the other succeeds? Why? 



LIBRARY OF CONrpeco 

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